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Portugal’s mortgage debt hits record €116.8bn, fastest rise since 2003

Portugal’s mortgage debt hits record €116.8bn, fastest rise since 2003

A billion euros in thirty days. That is the pace at which Portugal’s mortgage pile grew in June—roughly €35 million a day flowing into housing debt, a rhythm the country has not sustained since the years that preceded its worst financial crisis.

Banco de Portugal data released on 27 July put the outstanding stock of housing loans at €116.8 billion at month’s end, the highest figure since the central bank began its statistical series in 1979. Year-on-year growth accelerated to 10.9%, a rate unseen since February 2003, the opening chapter of the credit expansion that fed Portugal’s housing bubble and ended in a troika bailout. In a single month the stock swelled by €1.056 billion.

The engine behind the surge has a face: by 2025, borrowers under 35 already accounted for 54% of new housing contracts, up from 40% the previous year, propelled by a state guarantee that lets young buyers finance up to 100% of a property’s value. The programme has redrawn the risk map. Between 2024 and 2025, high-risk borrowers leapt from 3% of new lending to 21%; loans with a loan-to-value ratio above 90% jumped from a residual 0.1% to 19%, with 85% of those at full financing under the state guarantee. In April 2026 the government topped up the scheme by €750 million.

The central bank is now tapping the brakes. From 1 August (five days after these figures were published), a tighter debt-service-to-income cap of 45%, down from 50%, takes effect. Whether it bites fast enough is uncertain: Portugal’s credit growth already outpaces the eurozone average, and a quiet structural shift may blunt the regulator’s other lever. For the first time, mixed and fixed-rate loans have overtaken variable-rate contracts in the total outstanding stock, meaning Euribor moves no longer ripple through every household budget the way they did in 2003.

The mortgage machine, in short, is running hotter and wired differently than it was two decades ago. The billion-a-month rhythm is the same; the shock absorbers are not.