Portuguese Residential Mortgage Market Update 2025

In this commentary, we provide an update on the Portuguese residential mortgage market and an analysis of recent events that are shaping the trends within residential mortgage-backed securities (RMBS) transactions with collateral originated in the Republic of Portugal.

Key highlights of this commentary include:

-- The sustained upward trend of house prices is expected to continue in 2025, albeit at a slower pace.
-- The supply-demand dynamics, lack of new construction, and increased foreign interest shall persist in the short to medium term and keep upward pressure on prices.
-- Portuguese RMBS transactions largely benefit from decreasing interest rates, low unemployment levels, and high seasoning levels, which translates to lower loan-to-value ratios.
-- Given that residential mortgages in the country are typically granted with a floating rate, mortgage borrowers will face a more relaxed balance sheet and thereby help keep Portuguese RMBS credit ratings stable throughout the year.