In July, the implicit interest rate on mortgage loans in Portugal decreased to 4.487%, marking the first time it has fallen below 4.5% since October of the previous year. For new contracts, the rate dropped to 3.713%, the lowest level recorded since April of last year.
The decline in mortgage interest rates continued into July, marking the sixth consecutive month of decreases, though the pace of decline has slowed. The overall rate across all loans fell below 4.5%, while rates for new contracts reached their lowest point in over a year. According to the National Institute of Statistics, mortgage rates on new contracts have seen a steady decrease over the last three months, culminating in the ninth consecutive reduction to 3.713%.
This downward trend is largely attributed to the reduction in Euribor rates following the European Central Bank’s decision to lower its key interest rate in June. The growing preference for mixed-rate mortgages (with fixed rates for an initial period) is notable, with approximately 78% of new mortgage agreements being signed under this structure by the end of June.
Despite the lower interest rates, interest payments continue to represent a significant portion of household monthly expenditures. In July, the average mortgage payment slightly increased to €405, while the average outstanding debt rose by €250, reaching €66,529.
For real estate investors considering the Portuguese market, the sustained decline in mortgage interest rates, particularly for new contracts, presents a favorable environment for financing property acquisitions. However, it is important to remain cautious as interest payments still constitute a significant portion of household budgets. This trend suggests a stable yet potentially competitive market for investors seeking to capitalize on the current low-rate environment.
Source: Público
