OE2024: What is expected in housing and how to prepare.

Do you want to apply for a home loan in 2024, or save with yours? The credit intermediaries at Poupança no Minuto are here to help you... contact us now, or first find out what is planned for housing in 2024.

What is planned for housing in the OE2024?  

The State Budget for 2024 (OE2024) was delivered to parliament on Tuesday, October 10, and already includes some reinforcements in housing. As part of the More Housing package, the programs and respective supports that will remain in force are now explained.

According to Notícias ao Minuto publication, the focus will be on "strengthening incomes, promoting investment and protecting the future".  

Starting with the extraordinary income support, for families with an effort rate higher than 35%, the same investment value as in 2023 is planned: 250 million euros. Remember that this support can go up to 200 euros per month and is expected to reach around 185 thousand families in 2024.  

On par with this measure, the Government also assumes that "it is crucial to adopt mechanisms of coordination with the private rental market, with a special focus on providing more immediate responses to families with lower and average incomes".

About the 1st Right program, supporting access to housing aimed at people living in undignified conditions, a budget of 330 million euros is planned for 2024, with a focus on reaching 26 thousand families by 2026.

The Porta 65 Jovem rental program, for young people between 18 and 35 years old, the Government plans to invest an additional six million euros in 2023, with 37 million euros budgeted for 2024. In this program, around 26 thousand young people can apply throughout the next year, through continuous applications.

More Housing: The measures to be in force in 2024 

According to Notícias ao Minuto, the OE2024 also details the new measures of Mais Habitação, in effect since October 7th:  

• In the Porta 65+ program, extended to single-parent households or with a drop in income exceeding 20% in the previous three months, there is an expected budgetary impact of four million euros;
• For the "Rent to Sublet" program, aimed at households with a gross annual income equal to or less than the 6th IRS bracket, five million euros are allocated, with 106 affordable rent houses being drawn in 18 municipalities in the country;
• There is still a plan for a strengthening of the public housing stock at affordable costs for households with middle incomes, including 6,800 homes by 2026 and costing 216 million euros.

Mortgage: How to prepare for 2024?  

Forecasts with the OE2024 for inflation remain slightly pessimistic, anticipating a rate of 3.3% in 2024. Remember that the ideal value for inflation should be around 2%. As the forecast for interest rates to rise also remains, families with variable rate mortgages will continue to feel the impact on their monthly payments.

To minimize this impact, the Government will implement some measures related to mortgage credit, such as:

1. Fixation and reduction of the monthly installment - Available between November 2nd and the end of the 1st quarter of 2024, for credit contracts for own and permanent housing with a variable rate (or mixed, in a variable period), concluded by March 15th, with a residual term or over five years, allowing the installment to be fixed for two years, by applying a 70% index of the 6-month Euribor (note that the differential amount will have to be refunded four years later, spread over the remaining term of the contract).
2. Temporary interest bonus - It is a reinforcement measure of a previously in force bonus, but now calculated on the benchmark value above 3%, applies to households with incomes up to the 6th bracket, without differentiation, with the bonus being applied in 100% if the effort rate is equal to or greater than 50%, and in 75% when the effort rate is between 30% and 50% (note that the bonus amount cannot exceed 800 euros).
   

Mortgage credit: The measures to take effect in 2024

So, how should one prepare for 2024 in terms of mortgage credit? We provide some tips.  

Are you going to take out a home loan? Evaluate which interest rate to choose 

If you're planning to apply for a housing loan in 2024, the key is to search for several financing proposals so you can choose the most suitable one for you.  

When getting a mortgage, you can choose between three types of interest rates: variable, fixed, or mixed.  

The variable rate is indexed to Euribor, so its value depends on Euribor variations. Since this index has been constantly rising, Portuguese variable rates also rise, with a direct impact on their installments.

A fixed rate assumes that you pay the same fee throughout the entire contract, providing greater security and stability.  

A mixed rate combines both options: allows for a fixed rate period first, followed by the remainder of the term at a variable rate.  

Currently, banks are offering lower values of fixed rate for a period, such as two years, then returning to the variable rate. This is so that credit borrowers can have access to the same value, without surprises, while the Euribor continues to rise, and as soon as it decreases again, to the variable rate at lower values.

Therefore, when hiring a housing loan, know that this is one of the factors that will most affect the amount you will pay in installments. You should inform yourself beforehand, and make several simulations, also requesting proposals from different banks.

Already have a mortgage? Transfer to another bank  

If you already have a home loan but want to save on the monthly installment, know that there are options: in addition to the measures offered by the Government, you can also resort to credit transfer (simultaneously).

With a housing credit transfer to another bank, you can achieve different conditions, such as changing from a variable rate to a fixed rate, which will allow you to save on this expense.  

In most banks, this process is free, with the only potential cost being a early repayment fee in your current bank, which is currently suspended by the Government, in variable rate credit contracts.

It's easier to ask for help from a credit intermediary 

Are you interested in any options? A credit intermediary, like Poupança no Minuto, can clarify all your doubts and calm all your anxieties.

Through personalized customer service, and also at no cost, Savings in a Minute agents handle all the bureaucracy in credit processes and communication with the bank.

With the help of a credit intermediary, it is easier to access savings on home loans! Contact us and start your budget relief as soon as possible.