What is the profile and preferences of those applying for mortgage loans? A study based on data from ComparaJá.pt users
Based on data from the last 10,000 ComparaJá.pt users, the financial comparison portal reveals the profile and preferences of those who apply for mortgage loans. Among the main conclusions of the Mortgage Barometer 2020 are:
Purpose: For every 10 credits requested, seven are for purchase, two for construction and one for transfer;
Term: More than four out of 10 credits have maturities between 36 and 40 years. Only 16% have terms of up to 25 years, with an average of 33 years;
LTV: most families want 90% financing. Only 1/3 with guarantee/financing ratio below 80%.
Age: More than half of the applicants are aged between 31 and 40 years, with consumers aged up to 30 years representing only 17% of the total. At the end of the term of the credit agreement, 55% of the proposers will already be in retirement.
Installment: 1/3 of the families pay an installment between 250 and 399 euros. Average is set at 463 euros per month, with 18% of the contract installments below 250 euros.
Turnkey mortgage loans are the most sought after
Approximately 7 out of 10 Portuguese apply for mortgage loans in order to purchase houses already built, opting for the turnkey solution with regard to real estate credit. 72% opt for this modality, according to data from the last 10,000 consumers who used ComparaJá.pt.
On the other hand, about 2 out of 10 families (18% more specifically) prefer to apply for credit in order to build housing from scratch.
The rest of the cases (10%) are made up of consumers who already have an outstanding loan and, in order to save on interest by taking advantage of lower spreads, they choose to transfer the loan to another institution.
Average contracts are fixed at 33 years
Regarding the deadlines for applications for mortgage loans, most families have been applying for loans for more than 30 years. Here are the indications of Banco de Portugal which, in their macro-prudential measures, set a limit of 40 years on mortgage loans, which they intend to reduce to 30 years in 2022.
The average maturity of the loans requested by the users of ComparaJá.pt is at 33 years, below the 40 years recommended by the regulator, but still above the amount that it wants to see for new credits from 2022 onwards.
It should be noted, however, that the housing credit ecosystem still includes a large part of loans with terms between 36 and 40 years (43%).
Consumers wait almost until 40 to buy a house
If the purchase of a house was seen almost as a second step in the entrance of adult life, the truth is that, on average, the Portuguese wait until they are 38 years old to apply for housing loans. In fact, it is the entry into the 30’s that seems to lead to the search for a home of its own.
25.2% of the users of the mortgage loan service on the comparison portal are aged between 31 and 35 years old, while 26.6% use real estate financing between 36 and 40 years old. It should also be noted that a significant percentage (17.9%) still buys a house when it is in the first half of the ’40s.
Majority has just paid off the loan after entering retirement
The age of completion of the payment of the home loan, in most cases, only happens after the applicants have entered retirement age. According to data from ComparaJá.pt, it is concluded that 55.11% only pay the housing credit after 66.6 years.
In fact, the highest percentage is among those who have just paid the bank when they are between 71 and 80 years old.
Chosen houses have, on average, 116 m2
With regard to the size of the house, the average gross area of the properties acquired by the families that used the comparison portal is 116 m2. In fact, it is in the range of 75 m2 to 124 m2 that a greater preference for the Portuguese is noted, with 35% having acquired a house in this range of dimensions.
It is also worth mentioning the intervals of up to 74 m2 (21% of cases), from 125 m2 to 174 m2 (19%) and from 175 to 274 m2 (17%), as having relevant percentages in the users’ choices. On the other hand, only 5% choose a house that has more than 275 m2.