Lisbon's Mortgage Rates Are Climbing: A Sign for Foreign Buyers to Act?
Key Euribor rates, which determine the cost of most variable-rate mortgages in Portugal, are on the rise. This development, following what many analysts believe was the final interest rate cut from the European Central Bank (ECB), signals that the era of falling borrowing costs may be over. For foreign investors looking to finance a property purchase in Lisbon, this is a critical market signal.
What Foreign Investors Need to KnowThe three-month and six-month Euribor rates have both ticked up, while the 12-month rate is holding firm above 2%. This suggests that banks are no longer anticipating further rate cuts from the ECB. "The message from the market is that this is likely the new floor for interest rates," explains a mortgage advisor. "For a buyer, this means the cost of financing a €500,000 property is unlikely to get cheaper and could begin to get more expensive. The period of waiting for a better deal on a mortgage may have passed."
Actionable Steps for Today's Buyer- Lock in a Rate: If you are planning to buy with financing, securing a mortgage pre-approval now can protect you from potential future rate hikes.
- Re-run Your Numbers: Calculate your potential monthly payments using the current Euribor rates (around 2.1% for 12-month) to ensure your budget is realistic for the current market.
- Consider Fixed-Rate Options: While less common in Portugal, inquire about fixed-rate or mixed-rate mortgages to gain certainty over your payments for the initial years of your loan.
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