Amidst growing uncertainty driven by the energy crisis, rising inflation and historical increases in European Central Bank (ECB) interest rates (in an attempt to contain inflation), consumer lending continues to see growth in most categories in Portugal in 2022. The one exception is education lending which continues to have low market penetration.
Credit moratoriums, created in March 2020 to protect families and businesses hardest hit by the effects of the COVID-19 pandemic, ended over the second half of 2021. This led to an increase in defaults on payments with banks with many people suddenly finding themselves with a shortfall, with this being exacerbated by the rising cost of food and energy.
After dynamic growth in mortgages/housing in 2021 (in terms of gross lending), 2022 has seen a change in consumer behaviour with demand for homes to rent growing substantially while the number of homes being purchased is growing at a slower rate. This trend has been fuelled by an increase in the cost of real estate, which is linked to a supply shortage, the historic rises in Euribor rates and the loss of purchasing power of consumers due to rising inflation levels.
The health and financial crisis resulting from COVID-19 has impacted the lives of people in Portugal and has contributed to an uncertain future. These unexpected circumstances have forced consumers to adapt the new economic scenario, including adapting their consumption habits and their way of communicating.
The high level of household indebtedness, when compared to the international context, as well as the high exposure to the financial system, in a context of historical increases in interest rates by the ECB, bring fears of an economic recession and an increase in consumer credit defaults. With the loss of purchasing power on the part of Portuguese families, the government is studying support measures, but these may be insufficient to avoid an increase in non-performing loans.
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Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.See All of Our Definitions
This report originates from Passport, our Consumer Lending research and analysis database.
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