Portuguese families are taking on record levels of consumer credit in the first half of the year, with banks extending at least 700 million euros monthly in this sector. This surge encompasses automotive, personal, and credit card loans, all reaching unprecedented highs, signaling a renewed focus by banks on this segment.

Traditionally, recent years have seen a significant drop in consumer credit in June compared to the previous month, coinciding with the receipt of holiday allowances by a large portion of families. This pattern held in June 2025, with credit volume falling 10% from May. However, this decline was less pronounced than the drop observed between June 2024 and May of that same year, potentially indicating continued demand momentum for consumer credit despite seasonal factors.

Key Indicators

Market/Industry Signals: The record surge in consumer credit indicates increased household spending and growing confidence in future financial prospects, supporting economic growth. Banks' focus on this sector reflects a reassessment of risks and increased trust in borrowers' repayment capacity.
Leading Indicators and Data Points: The monthly issuance of at least 700 million euros in consumer credit (automotive, personal, cards) represents peak levels. A slight 10% dip in June 2025 from May, but less than the June 2024 decline, suggests robust demand trends despite seasonality.

Regional Perspective

Portugal presents a unique narrative of families shouldering a growing consumer credit burden, reaching record highs in the first half of the year. While this trend may fuel short-term spending, it raises questions about households' long-term financial sustainability, especially if interest rates rise or economic growth falters. Families may need to manage their debt prudently to avoid future financial strain.

Analysis

The sustained increase in consumer credit in Portugal, reaching record levels, is a double-edged sword. On one hand, it signifies growing confidence among consumers and banks, bolstering economic activity. On the other hand, it represents an accumulation of household debt, potentially increasing their vulnerability to future economic shocks, such as rising borrowing costs or job losses. Financial institutions should closely monitor asset quality, and households must exercise caution in their debt management.