Portuguese Mortgage Interest Rates Fall to 3.307% in August, INE Reports
The average interest rate on home loans in Portugal decreased to 3.307% in August, continuing a downward trend influenced by the European Central Bank's adjustments to its key rates. According to the official data released this Friday by the National Statistics Institute (INE), this figure represents a decline from the 3.385% rate recorded in July. The current rate now stands 1.35 percentage points below the recent peak of 4.657% which was registered in January 2024, signaling a significant easing in borrowing costs for homeowners. For the subset of new loans contracted within the last three months, the average interest rate was even lower, at 2.883%. This marks a cumulative drop of 1.497 percentage points from the high point observed in October 2023, reflecting more competitive conditions for new buyers entering the market. The INE report also provided details on monthly payments. The average mortgage payment for all outstanding loans was €394 in August, unchanged from July. However, for contracts finalized in the past three months, the average payment was significantly higher at €651. An analysis of the payment composition for the broader pool of loans shows that 51% of the average payment, or approximately €199, was allocated to interest, with the remaining €195 going toward principal amortization. The average outstanding capital for all home loans increased slightly to €72,862. In contrast, the average principal for new loans taken out in the last three months was €161,321, indicating higher purchase prices in the current market. For the specific purpose of "Acquisition of Habitação" (Home Purchase), which constitutes the majority of housing credit, the average interest rate was 3.301%. Stay informed on Lisbon property market developments at realestate-lisbon.com.