Euribor Rates Shift as Market Awaits European Central Bank's Next Move
The Euribor rates, a key benchmark for loans across the eurozone, registered a mixed performance on Monday, with the three-month rate holding steady while the six-month and 12-month rates increased. This movement in the interbank lending rates directly influences the cost of mortgages in Portugal, where a significant number of home loans are tied to these indices. The financial market is closely monitoring these fluctuations as they provide insight into expectations for future monetary policy from the European Central Bank (BCE).
According to the latest figures, the three-month Euribor was fixed again at 1.994%. Meanwhile, the six-month rate rose to 2.077% and the 12-month rate, which is the most prevalent in the Portuguese mortgage market, climbed to 2.156%. Data shows that the 12-month and three-month Euribor terms are used in 32.28% and 25.58% of the nation's variable-rate loans, respectively, making these daily changes highly relevant for household finances and the real estate sector.
This development follows the most recent monetary policy meeting of the BCE on July 24, where the governing council decided to maintain its key interest rates. That decision came after a cycle of eight rate reductions that began in June 2024. Market analysts remain divided on the path forward. Some anticipate that the BCE will hold rates at their current level for the remainder of the year, whereas others are forecasting a further 25-basis-point cut during the September meeting.
The monthly averages for July had already signaled a potential shift in the trend seen in previous months. The average rate for the three-month Euribor increased by 0.002 points to 1.986%, and the six-month average rose by 0.005 points to 2.055%. In contrast, the 12-month average, after holding steady in June, experienced a slight decrease of 0.002 points to 2.079% in July. These averages are critical as they are often used for the periodic recalculation of interest on existing loans.
The Euribor rates are calculated based on the average interest rates at which a panel of 19 major European banks are willing to lend funds to one another. This mechanism makes them a forward-looking indicator of the health of the banking sector and broader economic sentiment. The next monetary policy meeting of the BCE, scheduled for September 10 and 11 in Frankfurt, is now a key event on the financial calendar, as its outcome will likely determine the direction of borrowing costs in the coming months. Stay informed on Lisbon property market developments at realestate-lisbon.com.
