In the last 7 years, there has been a 'boom' of credit intermediaries (housing) in Portugal, coinciding with the arrival of sector regulation. Now, the Bank of Portugal (BdP) wants to review the legislation that governs credit intermediation, through the simplification of rules and the creation of access requirements for the activity. This initiative from the banking supervisor is viewed positively by Tiago Vilaça, president of the National Association of Authorized Credit Intermediaries (ANICA): “Credit intermediation has indeed grown massively (...), so it is urgent that we start to bring some rules as well, particularly regarding mandatory training,” he admits in an interview with idealista/news.

The strengthening of training for credit intermediaries is one of the points that Tiago Vilaça wants to bring to the review of the Legal Framework for Credit Intermediaries (RJIC), a process in which ANICA is "actively participating." In his perspective, "it is normal for the RJIC, being nearly 10 years old, to be revised, because the world is so dynamic and everything happens so quickly that we must have the ability to adapt legislation to reality."

Today, credit intermediation is freely accessible to anyone who wants to be a credit intermediary. And we will stop here regarding the initial training.

In your opinion, it's not just the regulations governing credit intermediation that need changes. The person in charge also sees 'some limitations' in the new public support aimed at young people, which is why he suggests in this interview with idealista/news some adjustments both in the exemption of IMT and in the public guarantee, namely regarding age limits and when one can access the capital to make a down payment on a home loan.
Before buying a house, families should first "understand what their borrowing capacity is" to be able to gauge the house prices and the effort they can afford, advises Tiago Vilaça. He also recommends that attention should be paid to housing credit offers at a mixed rate, especially with the fixation of the house payment between 3 and 5 years. This is because, in the current macroeconomic and financial context, banks should "continue to work on a fixed and mixed component," which provides security in times of uncertainty like what we are experiencing today, advances the president of ANICA in this interview.

How do you assess the evolution of credit intermediaries (IC) in Portugal? What is their market share in housing credit?

I start by distinguishing the three aspects of credit intermediation in Portugal. There are tied credit intermediaries and non-tied ones, with only the latter being allowed to work with housing credit. We also have credit intermediaries acting as an accessory, who are usually found at points of sale for products and services. Overall, of the approximately 6,000 credit intermediaries registered with the Bank of Portugal, about 60% are accessory and cannot provide housing credit. Therefore, we are left with 40% of credit intermediation professionals who are providing housing credit, with the tied intermediaries being the vast majority.

There has been a 'boom' in the growth of credit intermediaries in the last seven years, following the enactment of the decree-law that regulates the activity and the transposition of the community directive. Now, we have about 6,000 credit intermediaries, a number that tends to stabilize, as there is starting to be some consolidation in the profession. What is happening is a clear specialization of professionals in this area of credit intermediation. After all, we end up being an extension, an arm of the banks, working very closely aligned with the banking sector, which is a very important partner. With this dynamic of credit intermediaries, we end up bringing more competition to the market because as liberal and independent professionals, we also have the need to manage a portfolio of interests, intentions, and even expectations. Therefore, we must closely monitor what is happening with the product.

The credit intermediation has actually grown massively (...), so it is urgent that we start to bring some rules, particularly in terms of mandatory training.

How do you evaluate the new rules of the Bank of Portugal (BdP) regarding the advertising of credit intermediaries? Has ANICA been involved in this process?ANICA has participated before, during, and now fully with the entry into force of this change. We had already been talking with the Bank of Portugal about the need for clarification in advertising. Therefore, we view this change positively. It clearly separates what is institutional advertising about a company that acts as a credit intermediary from what is advertising about products that the credit intermediary is authorized to distribute and about its activities. Until now, advertising did not have uniform rules, it was not separated into these three aspects, and it was not adapted to current needs, especially in the digital channel. These changes will greatly help the rules of advertising for agents, and we are also very pleased to have an active role and help reach this point.

The Bank of Portugal is currently revising the Legal Framework for Credit Intermediaries (RJIC) of 2017. What could change? We will have to wait a little longer before we can start making any comments, as the process is under study and is being internally reviewed by the regulator. We are actively participating, bringing the market's perspective and addressing the issues that concern us the most.

The credit intermediation has indeed grown massively or extraordinarily, so it is urgent that we start to bring in some rules, particularly regarding mandatory training. Nowadays, anyone who wants to be a credit intermediary has free access to credit intermediation. And we stop there regarding initial training. There is no subsequent renewal or updating of knowledge. In an activity that is so demanding, where we want consumers to have access to more transparent and careful information, I think this topic is essential and we need to bring it to this update of the RJIC. On the other hand, it is normal for the RJIC, with almost 10 years of existence, to need to be reviewed, because the world is so dynamic and everything happens so quickly that we must have the capacity to adapt the legislation to reality.
"The public guarantee is not managing to cover what are the phases of a home buying process. What is your opinion on the new measures aimed at young people for buying homes (exemption from IMT and public guarantee)? What are their advantages and risks for the market?The Government has this power to influence the market, in a way. Regarding the exemption from IMT and Stamp Duty for young people, we think the law could have been more ambitious, because we have some limitations, namely the age limit of 35 years. In fact, we could have a young couple, one aged 34 and the other 36. Therefore, it would be preferable to use an average age; perhaps this would help more, be fairer and more equitable."
On the other hand, the public guarantee is not managing to safeguard what the stages of a home buying process are, where there is initially a promise contract with the delivery of a cash amount and then there is the deed where the state's guarantee comes in. Therefore, not all banks are financing this interim cash entry for the promise contract, which forces young people to have their own resources - which they often do not have - or to rely on friends and family, who then cannot finance. There are adjustments in this measure that we believe should be made. But it is unequivocal that it was a positive measure that helped increase access to credit for home purchases by young people. We need to be careful that it does not become a speculative measure leading to increased home prices, because the market obviously has its own way of functioning, and there also needs to be a stronger oversight in this regard.

Why are families turning mainly to the mixed rate in home loans? And how is this influencing renegotiations and credit transfers?I fear that families do not seek what is the essence of a mixed rate, which is a certain predictability and security, keeping the payment fixed for some time. This is important at a time when we are living in an internationally unstable context; we do not know if we will suddenly face inflation issues and rising Euribor rates again.

The transfer market has been very dynamic in the shift from the indexed market [variable rate] to mixed rate, as the fixed rate has been decreasing, which initially brings an effective reduction in the value of the mortgage payment. We are currently seeing fixed rates, under the mixed rate regime, hovering around 2.5%. In the indexed market, adding the Euribor to an excellent spread (0.6% or 0.65%), interest rates are already above 3%. That is why there is a natural tendency for families to go for the mixed rate. However, fixing rates for 2 or 3 years is a relatively short period. What we advise is that the fixed rate should be between 3 and 5 years, allowing for stable payments during that period.

In Portugal, we have relatively high fixed rates compared to other countries, because we still do not have a sufficient fixed rate credit portfolio that allows us to be more competitive. But it is being created, having gradually increased, which is a positive factor. If we look at the forward rates and the swaps that are announced in the markets, a reduction in the fixed rate is expected by the end of 2025. But also, on the other hand, it is noted that there will be a gradual increase in the interest rate following that, which could exceed 3% by 2030-2033 - this without any external impact, as we have already experienced in the past."I believe that work will continue on a fixed and mixed component."



With the drop in interest rates, banks have been diversifying their mortgage offerings. Will this trend continue? What direction will it take? Why?I believe so. The banking sector responded very positively when interest rates rose by creating mixed and fixed-rate tools. I think the banks realized that Portugal was very exposed: at the time we came out of the negative Euribor period, more than 90% of mortgage loans were at a variable rate, which is not balanced and does not bring stability to the sector. Therefore, I believe that efforts will continue to focus on fixed and mixed components. And I think people should pay close attention to this phenomenon.

The process of transferring housing credit has become very dynamic, and I see this in a positive way. Therefore, we can see that this forces banks to become more competitive, with more offers and, in some way, also to respond in an aggregated manner. And it is good that we continue with this dynamic because there will continue to be an adaptation on the part of the banks or, at least, they won't remain in a comfort zone.

How can families ensure that they turn to authorized credit intermediaries? First, all credit intermediaries are required to have a registration, and this registration is public and can be consulted on the website of the Bank of Portugal. There, you will find the information sheet of the credit intermediary professional, which shows who is the responsible person, which banks they are authorized to represent, if they have a valid civil liability insurance, so there is a set of information that allows us to understand if we are dealing with a properly authorized credit intermediary. The regulator has been very proactive on this matter, but there must be reports of specific cases. There will always be unauthorized credit intermediaries, and this is something that needs to be protected in some way through the regulator.

The first advice I give is that, before looking for a house, you should understand your debt capacity. This is fundamental, because otherwise people can become disappointed; they may see the house of their dreams, start to idealize it and create an expectation, and then suddenly the bank does not approve the proposal. Banks and credit intermediaries are prepared to evaluate a set of information about the household applying for a home loan, and they can establish amounts for the purchase of the house. This allows a family to consult a real estate agent to search for a house in a more personalized way, preventing future disappointments. This is golden advice. 
In practice, it will work very well for all agents, because there is also a set of proposals that are not approved or that are approved but not for that specific property (which may have a higher value). There are also evaluation issues in the framework with the approval regarding the ratio between the credit granted and the value of the property. So, I would say to do it the other way around. A house starts with the foundations and not with the roof. And we first need to understand how far we can go. Here, a credit intermediary is someone who can help a lot and who does that work that the bank alone will not do, obviously, at least in terms of the commercial relationship. And we credit intermediaries are better prepared; we can help people understand their capacity for debt and conduct a more tailored research.

What we advocate at ANICA is that the credit intermediary itself should have an updated platform where it communicates which banks it can work with, which products it can distribute, and even success stories, so that people know they are dealing with a duly authorized professional. 'The first advice I give is that, before looking for a house, they should understand their debt capacity. What would you say to families seeking credit to finance the purchase of a house in the current moment of uncertainty?