The Bank of Portugal has approved a new macroprudential recommendation that tightens the rules for granting mortgages and consumer loans. The changes apply to all applications whose affordability assessment is carried out from 1 August 2026 onwards, according to the regulator’s official announcement

The biggest change is a lower maximum debt service-to-income ratio (DSTI). The limit falls from 50% to 45%, meaning that all monthly debt repayments combined — mortgages, car loans and other consumer credit — cannot exceed 45% of a household’s net income. Banks will also continue to apply a stress test by adding 1.5 percentage points to the interest rate used in the calculation, making the effective affordability test even stricter.
There will also be fewer exceptions. Until now, banks were allowed to issue up to 15% of new loans above the recommended DSTI limit. From August, that allowance drops to 10% of the total lending volume over each six-month period.

Mortgage maturity rules have also been simplified. The previous requirement for banks to maintain an average maturity across their mortgage portfolio has been abolished. Instead, only two age-based limits remain: borrowers aged 35 or younger can take mortgages for up to 40 years, while those over 35 remain limited to 35 years. For buyers aged 30–35, this is actually a small improvement, as the previous maximum term was 37 years.
One important change received far less attention. Banks will no longer be able to finance 100% of the purchase price when selling properties from their own balance sheets. These transactions will now be subject to the standard loan-to-value (LTV) cap of 90%. Residential property leasing has also been removed from the scope of the recommendation.

Why the tighter rules? According to the Bank of Portugal, the share of new mortgages issued to higher-risk borrowers jumped from 3% in 2024 to 21% in 2025, largely because of the government’s mortgage guarantee scheme for young buyers. At the same time, the housing market has continued to heat up: mortgage lending increased by 34.9% in 2025, with more than 133,000 new mortgage contracts signed.

An important detail is that this is formally a recommendation, not a law. Banks can still deviate from it, but they must justify doing so. The regulator has also indicated that these rules could eventually become legally binding, according to an analysis by ECO.

What does this mean in practice? A household with a net monthly income of €3,000 could previously qualify for total monthly debt repayments of up to €1,500. From August, that ceiling falls to €1,350. Borrowers close to the new limit may need to make a larger down payment, extend the mortgage term where possible, or pay off smaller loans before applying.