Bank of Portugal cuts mortgage loan effort ratio to 45%

The Portuguese regulator, Banco de Portugal, lowered the recommended maximum debt‑to‑income ratio for new mortgage credit from 50% to 45%. The change aims to curb rising household indebtedness and limit exposure to higher‑risk loans as house prices keep climbing.

The regulator also warned banks about the growing use of public guarantee schemes by young buyers. Its stated goal is to protect consumers and preserve financial‑system stability. A veteran banker quoted in the commentary recalled how earlier generations saved for a home, noting, “We bet on ourselves that we would earn more money and progress.”