Housing Loans With 100% Financing Create Worries for Young Real Estate Buyers
Loan data for Madeira shows a total of €570 Million borrowed, which is a 30% increase compared to 2023. Most of the credit granted in Madeira went to the purchase of primary homes, supported by programmes that offer full financing and tax exemptions for young adults. The Bruno Tavares, a financial specialist interviewed by RTP Madeira, warned that these conditions may hide future risks.
Our young people, on one hand, are having the advantage of 100% financing and tax exemption, but on the other hand, they are buying homes that may be a bit above price
Bruno Tavares, RTP Madeira
He explained that even a small drop in the housing market could create a situation similar to 2008, when loans were higher than the value of the properties.
When the State announced this measure, this was one of the banks’ concerns that is, if the market fell, what would happen to these young people?
Bruno Tavares, RTP Madeira
Banks Raised 2008-Style Concerns When the State Announced the Measure
These concerns were present from the beginning. When the government introduced the full-financing measure, banks questioned how borrowers would cope if property values fell.
The expert described it as “probably the biggest risk the banks may face here,” noting that families may not be able to rely on current public support if the market changes.
Effort Rate Too High, Average of Five Loans Puts Extra Weight on Budgets
Statistics show an average of five loans per consumer:
one mortgage
two personal loans
two credit cards
This combination is stretching monthly budgets across Madeira. Debt-to-income ratios (Effort rate) are now rising above recommended levels. The expert called the situation “a bit worrying,” stressing that families are taking on commitments that may be difficult to maintain if incomes fall or interest rates shift.
Source: RTP Madeira
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