"A convergence is observed to meeting the limits defined in the Recommendation, which translates into an improvement in the risk profile of borrowers," states the supervisor in its report on macro-prudential recommendations regarding new loans to consumers.

The recommendation, which has been in force since last July, set limits to the criteria used by lending institutions in granting new loans, with a view to preventing the accumulation of risks and increasing the sector’s resilience, while promoting access to sustainable financing for households.

According to the supervisor, there was a gradual improvement in the risk profile of mortgage borrowers, between July 2018 and March 2019, taking account key indicators such as DSTI - which sets total monthly instalments of all loans taken out by a borrower against their net monthly income - and LTV, the ratio of the loan amount and the value of the property that guarantees it.

Institutions have implemented this recommendation, the Bank of Portugal noted, albeit gradually, especially from October onwards.

In the second half of 2018 and in early 2019, new mortgage lending slowed, as did new consumer credit operations.

The report is based mainly on information on new loans to households "reported by a sample of 13 institutions with a higher market share – including institutions specialising in consumer credit – representing about 93% of new credit operations to private individuals."