The rapid rise in house prices in Portugal leaves families with little room to maneuver: those who want to buy a home end up doing so at much higher prices than in the recent past. And since salaries are not increasing at the same pace to allow for savings (a situation worsened by the rising cost of living), people end up having to borrow more money from the bank. These changes are quite significant in just two years: families are taking out new home loans 25% higher in value to buy homes that are 12% more expensive. But they have less disposable income.

This is what can be concluded from the analysis of the latest national mortgage market report prepared by idealista/créditohabitação. In the third quarter of 2025, households requested an average of €176,599 in loans from banks to buy a home — a figure 25% higher than during the same period in 2023.

This need to request higher-value housing loans comes in a context where house prices have reached record highs in Portugal. In other words, families are borrowing more because the homes for sale are significantly more expensive. The same report reveals that the average purchase price of homes in mortgage applications reached €209,177 in the summer of 2025 — a 12% increase compared to the same period in 2023 (when it stood at €186,386).

Mortgage credit in Portugal

Average values of mortgage applications for home purchases (in euros)

1Q2023
2Q2023
3Q2023
4Q2023
1Q2024
2Q2024
3Q2024
4Q2024
1Q2025
2Q2025
3Q2025
120k
130k
140k
150k
160k
170k
180k
190k
200k
210k

Mortgage credit requested 4Q2024: €164,025
Purchase price / Mortgage credit requested
Chart: idealista/news — Source: idealista/créditohabitação — Created with Datawrapper

But this is not the only explanation. Mortgage interest rates have dropped significantly during this period: the Euribor was around 4% in mid-2023, while this summer it stood just above 2%. This halving of interest rates also lowers families’ debt-to-income ratios, making higher-value loans feasible. Evidently, this increased financial leeway led families to request an average loan-to-value ratio of 86% in the summer of 2025, compared to 78% in the summer of 2023.

Of course, among the factors contributing to the increase in the amount of mortgage loans requested, we must also include the new support measures for young people under 35, which did not exist two years ago. These include exemption from IMT (property transfer tax) and the public guarantee, the latter having a significant impact on the increase in average financing since it allows for 100% loans for the purchase of a first home. The role of young people has become particularly relevant, as they now represent more than half of applicants in the third quarter of 2025 — and it is worth noting that since the implementation of these measures, there has also been a noticeable rise in house prices.

Mortgage loan applications in Portugal: what changed in two years?

Average values in mortgage applications

  3Q2023 3Q2025 Variation
Mortgage amount requested (euros) 141,296 176,599 +25%
Purchase price (euros) 186,386 209,177 +12%
Household income (euros) 3,479 3,088 −11%
Loan-to-value ratio 78% 86% -
Age (years) 40 37 -

Table: idealista/news — Source: idealista/créditohabitação — Created with Datawrapper

What also stands out is that household income has evolved in the opposite direction. While home prices and mortgage amounts have surged, the gross salary of those applying for a mortgage fell by 11% in two years, to an average of €3,088. What might explain this drop? The decline in borrowing costs, due to falling interest rates, opened the door to families with lower incomes. Younger buyers, at the start of their careers, tend to earn less. Moreover, there are now fewer foreign buyers (who generally have higher salaries) purchasing homes in Portugal than in the summer of 2023 — when golden visas and the old non-habitual resident regime were still in effect.

Young people buying homes in Portugal

Source: Freepik

Where are there more mortgage applications in Portugal?

The purchase of a first home continues to be the main purpose of mortgage applications submitted through idealista’s credit intermediaries, accounting for 78% of total requests. The remaining share is divided among non-residents (11%), holiday home purchases (7%), and mortgage transfers (3%). But where are families most interested in buying homes?

The distribution of mortgage applications across the country is clearly uneven, being mainly concentrated in Lisbon (24% of applications), Porto (14%), Setúbal (13%), and Faro (9%). These are among the most expensive regions in the country to buy a home, which pushes up the national average purchase price.

The Lisbon district has the highest average home purchase price (€255,974), as well as the highest average mortgage amount requested (€216,651). Next come Faro, Madeira, Setúbal, and Porto, all with average purchase prices above €219,000 and mortgage requests exceeding €180,000, according to the recently published report.

On the other hand, there are three districts where the average home purchase price is below €120,000, and the average mortgage requested is under €100,000: Guarda, Castelo Branco, and Bragança. However, these three regions together account for only 4% of all mortgage applications received by idealista/créditohabitação in the summer of 2025. Despite lower housing prices, the country’s interior continues to fail to attract families looking to live or invest.