The Banco de Portugal has confirmed the continuation of macroprudential measures applied to mortgage credit, including limits on the loan-to-value (LTV) ratio and debt servicing ratios for borrowers. The measures, introduced in 2023 to curb over-indebtedness, remain in force in 2026.
What are LTV Limits?
The LTV ratio defines the maximum percentage of a property's value that can be financed by a bank. For primary and permanent residences, the limit is 90% for first homes and 80% for second homes and rental properties. For non-residents, the practical limit for most banks is around 70-75%.
Debt Servicing Ratio
The Banco de Portugal imposes a ceiling of 50% on the debt servicing ratio - i.e., monthly mortgage payments cannot exceed half of the household's net monthly income. This limit is calculated using a stress test that takes into account possible future increases in Euribor.
Impact of the Decline in Euribor
The downward trend in Euribor, which began in the second half of 2024 and continued in 2025-2026, has eased the monthly burden on variable-rate mortgage borrowers and made mortgage credit more accessible to more families within the regulatory limits.
For those considering applying for a mortgage, this is a favourable time to request simulations - but always with a careful analysis of long-term financial capacity.