The mechanism “should last for two years; be accessible to everyone.”
Portuguese Finance Minister Fernando Medina today announced the creation of a stabilization mechanism in the face of rising interest rates, as well as the extension of interest subsidies on mortgage loans.
Following up on the European Central Bank’s decision taken yesterday to increase interest rates for the tenth time in a row, he said to Lusa: “What the government is doing specifically is creating a mechanism to further protect these families from the movement of interest rates, to create a state of predictability and stability, at the same time that we are expanding access to credit relief, that is, the support we provide to those families who enjoy… With a certain income level, today she is at a very high level of effort.
According to Expresso, families with mortgages will be able to choose the option A solution that will immediately reduce the interest rate attached to their loans/loansAnd determine the amount that will be paid during the next two years.
After this period, the reduction will be compensated gradually in subsequent installments until the end of the loan term.
“In practice, households will end up paying the same amount – and banks will receive the same – but… The value of the debt and the actual “effort”. It will arise from the increase in interest rates They are distributed in a more stable manner over time – Basically at this stage when Euribor prices are at the maximum for several years.
“(These rates) are expected to decrease within two years, and they will be able to accommodate compensation without (financial) complications.”
Speaking to Portuguese journalists this morning at the entrance to the informal meeting of European finance ministers in the Spanish city of Santiago de Compostela as part of Spain’s Presidency of the Council of the European Union, Mr. Medina underlined the Executive’s awareness of the difficulties that many Portuguese families are now experiencing.
According to the minister The government “has been working hard in recent months” With the Bank of Portugal and the Portuguese Banking Association to mitigate the impact of the ECB’s policies.
As the Prime Minister has already indicated, the specific measures will be approved by the Cabinet next Thursday.
According to Expresso’s understanding, the mechanism will be “available to every customer with a bank loan, regardless of their income or loan amount. All people will need to do is ask their bank…”
The paper continues: “In principle, this mechanism is only available for people’s permanent homes, but there is a possibility that it could be extended so that all mortgages are included.
The government’s position comes after the European Central Bank announced that it would raise the three key interest rates by 25 basis points, as it did at the previous meeting, putting the deposit interest rate at an all-time high in the euro zone.
In the statement issued after the Governing Council’s monetary policy meeting, the ECB said that the interest rate on major refinancing operations, interest rates on marginal lending facilities and deposit facilities will be increased to 4.50%, 4.75% and 4.00%. % respectively, as of September 20, 2023.
This latest rise means the ECB has raised interest rates by 450 basis points since July last year – the fastest rate hike cycle in the history of the euro zone.
Inflation has fallen in recent months, but remains above the European Central Bank’s 2% target for price stability.
To achieve this, the European Central Bank has tightened monetary policy through successive interest rate increases, which are now at a slower pace, leading to lower consumption, Lusa writes.
Against this background, eurozone finance ministers today discuss the macroeconomic context in the single currency area, and will have to insist on caution in handling the budget.
Source: Lusa/Expresso