Portugal tightens household credit rules as families become smaller and more indebted

The Bank of Portugal announced that, from August, it will tighten rules for granting credit to households. The maximum debt‑service ratio for loans will fall from 50% to 45%, and the exception threshold for borrowers with a ratio above 45% will be reduced to 10%. Loan maturities will be extended to 40 years for borrowers up to age 35 and 35 years for older borrowers. The bank said the measures respond to rising household indebtedness despite higher disposable incomes, noting that average mortgage loans rose to €207,000 in late‑2025 and consumption loans reached €19,000 in early‑2024. The bank expects only a small impact on investment and GDP.

A recent demographic study of Portugal shows a parallel shift in household composition. Between 1991 and 2022, single‑person households grew by 53%, while households of five or more people fell by 70%. Average household size dropped from 3.1 to 2.5 persons, and total households increased by 25.9% to 4.11 million. The trends are driven by an ageing population, lower birth rates, higher divorce rates and young adults delaying emancipation because of housing costs. These social changes increase the relevance of the new credit rules for a growing number of solitary borrowers.