According to the former Minister of Finance of the PS (António Costa's Government), the work done to make the banking system more solid was "very difficult" and "once this position is achieved, it is not prudent to jeopardize it". In addition, he said, excessive indebtedness was at the origin of the financial crisis, so "it must be prevented".

"All the criteria in the macroprudential recommendation are to be taken very seriously," he stressed.

Regarding the exemption from IMT (Municipal Tax on Onerous Property Transfers) on the purchase of the first house by young people, Centeno said that this measure "has a much lower systemic impact" than the public guarantee measure because "there is no increase in household debt".

Regarding the decree-law on the public guarantee, he stated that the Bank of Portugal was not aware of it before it was approved, but that there is "continuous work" between the Bdp and the Ministry of Finance and that the legislative process is not concluded, and that it is necessary to know the legislation to better analyze it.

The Government announced a public guarantee to facilitate the purchase of a house by young people (up to 35 years old) using housing credit, this guarantee being up to 15% of the acquisition value of the properties. The State acts as guarantor, so that if the person defaults on the loan, the State assumes it.

The Minister of the Presidency, Leitão Amaro, explained this Monday that "the guarantee exists until the young person pays the first 15% [of the loan] to the bank", specifying that when these 15% are paid, "the State leaves the equation".

The measure, which the Government wants to have in force on August 1st, is aimed at young people between 18 and 35 years old, with incomes up to the 8th IRS bracket, that is, 81,199 euros of annual taxable income.

The rules currently in force establish that, in general, housing credit cannot exceed 90% of the value of the permanent and own housing (being, for this purpose, considered the lowest value between the acquisition value and the appraisal value).

The monitoring report of the macroprudential recommendations on credit, presented in March, indicated that the risk profile of new housing credit customers improved in 2023, with 61% of new loans (including credit transfers) being taken out by low-risk customers.

The weighted average maturity of new housing credit operations was 30.6 years in December 2023, so -- according to the BdP -- banks are complying with the recommendation to converge the average maturity to 30 years.

In 2023, in view of the increase in interest rates, the Bank of Portugal reduced the effort rate that banks have to simulate to facilitate access to this credit from 3% to 1.5%.

Read Also: BdP foresees risks in the use of European funds and political decision-making process (Portuguese version)

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