Mortgage credit: Early repayments and renegotiations increased (a lot) in 2023.

Prepaid refunds and renegotiations skyrocket in housing credit.

Early refunds and renegotiations skyrocketed in 2023, possibly linked to the Government's temporary measure that suspended associated commissions.  

The information is from Banco de Portugal and disclosed in a news article by Notícias ao Minuto, which explains: "In 2023, there were 247,601 early repayments (partial or total) in housing credit, with a total amount of 11.2 billion euros".

As for renegotiations, it can be read that those "resulting from contractual changes increased by 271.6% in number and 300.8% in value", totaling, during the past year, 154,071 renegotiations, "corresponding to a total renegotiated amount of €17 billion".

The Portuguese Central Bank justifies this increase due to the "validity of legislation that temporarily suspended the collection of commissions for early repayment in contracts for permanent variable-rate home loans," explains the news.

The entity also notes that, regarding the initial amount granted in new home loan contracts, it fell for the first time in ten years, even in a context of increasing reference interest rates. Compared to last year's numbers, on average, 8,358 home loan contracts were signed per month, totaling a global amount of 1,131 million euros.

Regarding the interest rate regime chosen in housing credit contracts, the BdP points out that the share of new contracts "signed at a mixed rate increased from 12.3% in 2022 to 45.0% in 2023", while "the percentage of new contracts at a fixed rate went from 6.9% to 12.4%".

However, at the end of 2023, "the majority of contracts in the institutions' portfolio continued to be at the variable rate (86.2% of contracts and 79.1% of the outstanding balance)", as also stated in the news.

In addition, it is further indicated that the average spread of new variable rate contracts dropped from 1.09 percentage points in 2022 to 0.93 in 2023.

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