Notice No. 6/2024

Published in: DR, 2nd Series, Part E, No. 253, of 31-12-2024 Mod. 99999910/T – 01/14

Index

Text of the Notice
Annex to the Notice

Text of the Notice

Through Decree-Law No. 44/2024, of July 10, the conditions under which the State may provide personal guarantees to credit institutions were defined, with a view to facilitating the granting of housing credit for own and permanent housing to young people up to 35 years of age. This regime was subsequently regulated by Ordinance No. 236-A/2024/1, of September 27, which also approved the draft protocol to be concluded between the General Directorate of Treasury and Finance and the adhering institutions.

According to the aforementioned regime, the General Directorate of Treasury and Finance may intervene as guarantor in credit contracts for the acquisition of first housing, concluded with an adhering institution, by young people up to 35 years of age, who meet the eligibility conditions legally provided for, covering, in the event of default by the debtor, an amount up to 15% of the initial credit capital granted. The conclusion of a credit contract under the State personal guarantee regime allows the client to finance the acquisition of the first housing in an amount higher than that resulting from the application of the loan-to-value (LTV) ratio provided for in paragraph 1 of Article 5 of the macroprudential Recommendation of the Bank of Portugal regarding new credit contracts concluded with consumers, but presupposes, in any case, compliance by the institutions with the obligations to which they are bound to guarantee the financial capacity of clients and preserve financial stability.

Access to the State personal guarantee regime must presuppose that clients are aware of its characteristics and mode of operation, as well as the risks associated with it. In this context, the Bank of Portugal considers it necessary to establish, through this Notice, the requirements for the information that adhering credit institutions must disclose regarding the State personal guarantee regime, as well as the information that should be made available to clients at a time prior to the conclusion, and during the validity, of housing credit contracts under the aforementioned regime.

Thus, in the exercise of the powers attributed to it by paragraph 4 of Article 77 of the General Regime of Credit Institutions and Financial Societies, approved by Decree-Law No. 298/92, of December 31, in the current wording, as well as by paragraph 4 of Article 14 and paragraph 3 of Article 22, both of Decree-Law No. 74-A/2017, of June 23, in the current wording, the Bank of Portugal determines the following:

Chapter I

General Provisions

Article 1

Object

This Notice concretizes the duties of disclosure of information to the public and provision of information to banking clients regarding the State personal guarantee regime for facilitating the granting of housing credit for own and permanent housing to young people up to 35 years of age, provided for in Decree-Law No. 44/2024, of July 10, and regulated by Ordinance No. 236-A/2024/1, of September 27.

Article 2

Definitions

For the purposes of this Notice, the following are understood:

a) "Credit Contract" a credit contract for the acquisition of own and permanent housing, covered by the provisions of Decree-Law No. 74-A/2017, of June 23, in the current wording;

b) "Institution" credit institutions and financial societies authorized to carry out credit operations for housing acquisition, with headquarters in Portugal, or branches in national territory of credit institutions or financial institutions with headquarters abroad, which have adhered to the protocol regarding the public guarantee concluded with the General Directorate of Treasury and Finance;

Amended by Bank of Portugal Notice No. 3/2025, published in the DR, II Series, Part E, No. 124, of 01-07-2025.

c) "State personal guarantee regime" the regime provided for in Decree-Law No. 44/2024, of July 10, and regulated by Ordinance No. 236-A/2024/1, of September 27.

Chapter II

Disclosure of Information to the Public

Article 3

Disclosure of Information to the Public

1 - Institutions make available information about the State personal guarantee regime on their respective websites and, where they exist, in home banking and mobile applications, with adequate prominence, during the period in which access to the aforementioned regime is possible.

2 - The information referred to in the preceding paragraph includes, at least, the following elements:

a) Specification of the credit contracts covered by the scope of application of the State personal guarantee regime;

b) Indication of the eligibility requirements provided for in the State personal guarantee regime;

c) Description of the main characteristics of the State personal guarantee, namely:

i) Modality of the guarantee;

ii) Maximum duration of the guarantee;

iii) Maximum limit of the guarantee coverage;

iv) Consequences of the activation of the guarantee.

3 - Institutions make available the information provided for in the preceding paragraph, on durable media, to clients who, at the counters or through distance communication means, express interest in obtaining information about the State personal guarantee regime, and may use the model contained in the annex to this Notice.

4 - The information provided for in the preceding paragraphs is accompanied by the mention that meeting the eligibility requirements provided for in the State personal guarantee regime does not prejudice the free decision of the institution regarding the granting of credit.

Article 4

General Duty of Assistance

1 - Institutions ensure the clarification of doubts raised by clients by making available, in an easy and permanently accessible location, namely on their respective website, a frequently asked questions section regarding the application of the State personal guarantee regime.

2 - Without prejudice to the provisions of the preceding paragraph, the clarification of doubts may also be ensured through employees involved in customer service, at the counters or through distance communication means.

3 – If the client expresses the intention to benefit from the State personal guarantee regime, and meets the eligibility conditions, the institution must provide information to the borrower regarding the amount of credit to be granted that will be covered by the guarantee.

Chapter III

Provision of Information During the Validity of the Credit Contract

Article 5

Information to be Provided in Case of Activation of the State Personal Guarantee

From the month following the activation of the State personal guarantee and as long as outstanding and unpaid amounts to the State remain, the institution must make available to the borrower, through statements related to the credit contract, information regarding:

a) The capital amount whose payment is borne by the State under the guarantee, with details on the installments to which it relates;

b) The amount that remains in debt to the institution, with disaggregation of the components related to capital and interest and, if applicable, commissions and expenses;

c) The borrower's responsibility for payment to the State of the amounts covered by the guarantee and any additional charges in case of default.

Article 6

Information to be Provided Upon Cessation of the Validity of the State Personal Guarantee

The institution informs the borrower of the cessation of the validity of the State personal guarantee in the month prior to the date of cessation.

Chapter IV

Final Provision

Article 7

Entry into Force

This Notice enters into force on the day following its publication.

December 17, 2024. - The Governor, Mário Centeno.

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Annex to Notice No. 6/2024 of the Bank of Portugal

Annex to the Notice

Model of Information on Public Guarantee in Housing Credit for Young People

State Personal Guarantee Regime

Young people up to 35 years of age may benefit from a personal guarantee provided by the State to facilitate the granting of credit for the acquisition of the first permanent own housing, whose value does not exceed 450,000 euros.

The public guarantee aims to allow institutions to finance an amount between 85% and 100% (total) of the property transaction value. The transaction value corresponds to the acquisition price or, if lower, the property valuation value at the time of credit contracting.

The guarantee (suretyship) is valid for a maximum of 10 years after the conclusion of the credit contract. The guarantee amount cannot exceed 15% of the property transaction value.

In case of contract default, the State guarantee may be activated before the execution of clients' and guarantors' assets.

Institutions are not obliged to grant credit, even if clients meet the requirements to access the State guarantee.

Borrower Access Conditions

• Between 18 and 35 years of age (inclusive);
• Tax residence in Portugal;
• Cannot be owners of urban real estate or an autonomous fraction of urban residential real estate;
• Cannot have previously benefited from the public guarantee;
• Income that does not exceed the 8th bracket of the Personal Income Tax (IRS);
• And, being exempt from submitting an income tax return, must have declared monthly work income to Social Security or benefit from social benefits that do not exceed the monthly amount corresponding to 1/14 of the maximum limit value of the 8th IRS bracket;
• Regularized fiscal and contribution status.

Conditions Applicable to the Contract

• Acquisition of the first permanent own housing, where the property transaction value does not exceed 450,000 euros;
• With mortgage guarantee;
• Concluded until December 31, 2026.

Conditions of the State Personal Guarantee

The value covered by the guarantee cannot exceed 15% of the transaction value, with this percentage adjusted to a proportionally lower value in case the institution finances less than 100% of the transaction value.

If the client cannot make the payments they committed to, the State, as guarantor, assumes responsibility for making these payments to the institution that granted the loan, up to the limit defined for the guarantee amount.

The client will always be responsible for payment to the institution of the value not covered by the guarantee and to the State for the amount that the State may pay to the institution.

For other information about the State personal guarantee regime, consult [indication of the spaces where the information disclosed by the institution is located], and the Banking Client Portal, in What is it and different regimes | Banking Client Portal and Frequently Asked Questions | Banking Client Portal (Credits > Housing Credit > Public Guarantee in Housing Credit for Young People up to 35 Years Old)

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Annex amended by:

• Bank of Portugal Notice No. 1/2025, published in the DR, II Series, Part E, No. 12, of 17-01-2025;
• Bank of Portugal Notice No. 3/2025, published in the DR, II Series, Part E, No. 124, of 01-07-2025.