Edition 1518
23 March 2019
Edition: 1518

Read this week's issue online exactly as it appears in print.

Twitter

Concern as credit card debt hits new high

by Brendan de Beer, in Business · 14-02-2019 10:15:00 · 2 Comments

Portuguese consumers are relying more and more on credit cards to purchase a wide range of items. Analysts have pointed to growing consumer confidence, spurred on by the economic recovery, as the main reason for consumers being ready to use their credit cards on items for which they might not necessarily have the money

Concern as credit card debt hits new high

According to new data published by the Bank of Portugal this week, the amount of people seeking credit from banks has also risen considerably. These figures show the number of people who secured loans to buy cars in 2018, was up by 120,000.


In terms of credit cards, the increase of those in debt climbed by 43,000 with 2.29 million people currently using them to make purchases.


This is now the highest number of people in debt with their credit card companies since records were first taken by the Bank of Portugal in March 2009.


The amount of debt outstanding has also climbed strongly, and now sits at 3.25 billion euros, another new record.
The amount owed to financial institutions for vehicle credit has ballooned to a record high, and has reached 6.1 billion euros this year. Overall, 840,000 people are in debt with banks having secured credit to purchase a car.


The Bank of Portugal has warned of a steep increase in consumer credit, explaining that this is being driven by a reduction in the unemployment rate, and an increase in wages, though interest rates on these types of credits remain high.


The banking regulator however pointed to increased competition among financial institutions having resulted in them easing on the spreads levied on top of existing interest rates.


This follows after the general approval of loans in Portugal reached a 15-year high in 2018.


Figures indicate that a credit of 4.66 billion euros was issued, for an average of 12 million euros a day.


Despite concerns over the ballooning debt among consumers, the number of people unable to meet their monthly repayments actually dropped in 2018 to their lowest in almost a decade.


Nonetheless, 137,000 people are unable to pay the minimum monthly value demanded from their credit card companies, while 61,000 people have defaulted on their car repayments.


In terms of mortgages, the number of home owners who are unable to meet their repayments has fallen to below 100,000 for the first time since 2009.


But despite calls on banks to employ stricter rules in issuing mortgages, Portuguese were handed close to 10 billion euros to purchase real estate last year, which is up almost 20 percent on 2017.


The new norms came into effect last July, and saw families’ spending on bank loans limited to half of their income.
Bank regulator Bank of Portugal said the objective was to prevent banks from “taking excessive risks on new loans and for customers to have the ability to pay off debts”.


But as is illustrated by the latest report from the Bank of Portugal these are merely recommendations - although banks that do not comply with them will have to explain their thinking in issuing loans to people apparently unable to meet repayments.


In its guidelines, the banking regulator recommends allocating new credits only to customers who spend a maximum of half (50 percent) of their net income on the monthly installments of all loans held, including mortgages and personal loans.


The banking supervisor can make exceptions; allowing customers to exceed this effort rate limit by up to five percent of the total amount of credit each bank grants per year, and that one-fifth of the total amount of loans granted each year may have an effort rate of 60 percent.


The regulator also recommends that the ratio between the value of the loan and the value of the property pledged as collateral should be limited to 90 percent for loans for permanent housing. That is, in these cases, the money borrowed for the purchase of a house can be at most 90 percent of the value of the property given as collateral.


This ratio is calculated based on the lower value of the purchase price of the house and the evaluation value of the house.
For loans with other purposes, the maximum to lend corresponds to 80 percent of the value of the property.


And lastly, the Bank of Portugal recommends a maximum of 40 years as a limit on the duration of the loan for new housing loan agreements and mortgage-backed credit. It also calls for gradual convergence to an average maturity of 30 years until the end of 2022. New consumer loans should last for a maximum of 10 years.

Comments

I live in USA Florida and i am a happy woman today? I told my self that any Loan lender that could change my Life and that of my family, i will refer any person that is looking for loan to Them. If you are in need of loan and you are 100% sure to pay back the loan please contact them and please tell them that Mrs Sharon Coolidge referred you to them. barrymoreloans12@gmail.com
by sharon coolidge from USA on 15-02-2019 12:15:00
We at FAST Loan Finance we offers loans at 2% interest rates to all our clients, Apply for a loan of up 2,000,00 to 20million. We offer a large list of different loan We offering loan to personal, serious and honest. we are 100% guaranteed loan company that can deliver what we promise to our clients. Direct contact : ( fastloansolutioninfo@yahoo.com
fastloansoultioninfo@gmail.com call or whatsapp +27749582344
We are an association of private investors in collaboration
with the service grants loan FAST LOAN FINANCIAL SERVICES LTD.
We put ourselves at the disposal of the lending world ,
the maximum period of repayment is 20 years .
the annual interest rate is 2% . The credit is granted to any person
who earns a fixed monthly income. For more information about the loan offer,
please kindly write to us at: E-MAIL: (fastloansoultioninfo@gmail.com call or whatsapp +27749582344 E-MAIL:fastloansoultioninfo@gmail.com call or whatsapp +27749582344 , You can also visit us on (https://web.facebook.com/Quicken-loan-firm...
NB : Contact directly by e-mail. Quick response. Not serious refrain.
Thank you to share the message to help those which are in the need
by willams from UK on 15-02-2019 10:07:00

Interactive Topics, send us your comments/opinion on this article.


Edition 1518
23 March 2019
Edition: 1518

Read this week's issue online exactly as it appears in print.

Twitter

Pub

  • Linen Etc
  • Audiocare
  • Veronica Pisco Lawyer
  • Abacoz
  • Intermarche
  • Malo Clinic
  • Toldolanda
  • Cris Piessens
  • Blacktower
  • Land and Houses
  • Nobel International School

Portugal in the world press

Powered by Google