Portugal’s banks divided over offering 100% mortgage financing

Some of Portugal’s most influential bankers were divided over the issue of granting 100% mortgages to the countries’ families and young people.

The bankers from Santander, Caixa Geral de Depósitos, BPI and BPC gathered yesterday at a Lisbon hotel to discuss the future of banking both within a national and European context at the conference ‘The Banking Sector of the Future’.

The half-day event held at the Sana Epic Hotel, which covered everything from AI and instant transfers to cyberthreats, involved a series of fireside chats with the bankers who were subjected to a quite heated, almost MI6-style grilling by the moderators, but who nevertheless remained unfazed, largely tight-lipped on controversial issues like Novobanco, and calm throughout the ordeal.

One of the biggest topics on the table, which all bankers were asked, was whether the banks were in favour of giving customers 100% mortgages without any type of downpayment of the usual 10% expected by banks in many other countries.

Currently, banks can give 100% mortgages in countries like the UK and Germany, although they are often conditional.

Portugal’s banks offer a 100% mortgage through a specific government-backed guarantee programme for certain first time buyers aged 36 or under to help them get on the housing ladder.

With low wages compared to many countries in Western Europe, it has been traditionally hard for young people to stump up the cash to provide a 15% deposit, and many young people rely on help from their parents and grandparents to find the cash.

However, some bankers believe that they are now in a comfortable enough position in terms of capitalisation that they can afford to take the risk of granting 100% mortgages, while one expressed reticence.

The CEO of Millennium bcp, Miguel Maya (pictured), for example, wants Portugal’s regulator, the Bank of Portugal, to charge the rules so more families can benefit from 100% mortgages. “There’s nothing to change my mind in thinking it’s worthwhile to change (the rules),” he said.

On the topic of macro-prudential rules – meaning focusing on the health of the entire financial system to prevent systemic crises of the kind Portugal suffered in 2014 when the State had to intervene and bail out several banks to avoid the possibility of a systemic collapse, rather than focusing on individual institutions – Maya said: “Everything put in place to protect the consumer and the stability of the system makes sense.

“But in the case of 100% mortgages the first thing we have to look at the are the reasons behind mortgage defaults. Is it the Loan-to-Value and the 100% mortgage financing? Or is it down to divorce, unemployment or sickness? These are the three main causes (of default)” he informed.

In other words, it wasn’t because people were stretched financially beyond their means through being encouraged to take on 100% mortgages that was the problem, but rather social problems that could impact the mortgage payer regardless of whether the loan was 100% or not.

And added: “100% mortgages make sense” and went on to say that he wasn’t expecting to have to recover practically anything from the public-backed guarantee”, meaning he wasn’t expecting a lot of defaults.

“The only thing that this measure gives is the comfort of being able to offer these mortgages”, he added.
And remarked: “In cases where there is unemployment, sickness or divorce”, we’ll use the public guarantees but we don’t need it”.

The CEO of Millennium BCP thinks that the Bank of Portugal should “listen to different points of view and reach an understanding to change the rules” if it made sense.

Portugal’s most entertaining banker, always ready with a joke to make an otherwise dry audience of grey suits laugh, João Pedro Oliveira e Costa, CEO of BPI agreed with his competitor, saying that the banks should be able to finance more than the usual 85% of the value of residential properties and suggested “we could go further”.

His opinion is informed by the bank’s ability to attract many clients on the back of the temporary public guarantee that the Portuguese government has given to young people aged 35 or under to finance their mortgages up to 100% to help them get on the first rung of the housing ladder.

This scheme is part of a wider bid to help solve Portugal’s chronic housing crisis where people simply couldn’t’t afford the price of properties in the face of a situation where property prices have doubled over the past decade, particularly in Lisbon and Porto and parts of the Algarve.

Of that share of public guarantees, BPI has around €100 million with half of that amount already lent out, a share that is similar to competitors Santander and Caixa Geral de Depósitos.

“It makes sense to create incentives for (housing) supply, because this measure is on the demand side and has an impact on the price”, he said.

The CEO of Santander Portugal, Pedro Castro e Almeida, pointed out that “measures on the demand side could only be temporary if we’re talking about a period of three years” – the period suggested by the government for this youth mortgage support programme.

Santander, because it has a large percentage of young people with mortgages compared to some of the other banks, got the lion’s share of the public guarantee and has enjoyed a strong uptake from young people.

But he said that the measure had contributed towards pushing up prices in Portugal’s housing market and therefore suggested it wasn’t a good idea to provide 100% mortgages on the value of properties.

Image: ANTÓNIO COTRIM
CEO of Millennium BCP, Miguel Maya calls fora return to 100% mortgages at the 8th ‘Banking of the Future Conference’ held in Lisbon, on Tuesday, November 18, 2025. ANTÓNIO COTRIM/LUSA
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