Euribor Rate Shift to Bring Mixed Fortunes for Lisbon Mortgage Holders in October
The period of consistent relief for Portuguese mortgage holders is coming to an end, with October marking a pivotal shift in monthly payments tied to variable Euribor rates. Homeowners in Lisbon and across the country with loans indexed to the 3-month Euribor will see their first payment increase in nearly two years, while those on longer-term indexes will experience a final, temporary reduction before rates are expected to climb across the board.
The announcement of these price changes comes from analysis by DECO PROteste, Portugal’s leading consumer protection agency. Nuno Rico, a financial specialist at the organization, confirmed that the average rates for all Euribor maturities have been rising for three consecutive months, with all indexes now sitting above the 2% mark. This signals a definitive change in the interest rate cycle that has governed mortgage affordability.
A detailed breakdown of the price movements, based on a standard €150,000 loan over 30 years with a 1% spread, illustrates the diverging paths. For mortgages renewing based on the 12-month Euribor, the applicable average rate of 2.170% will result in a new monthly payment of €646. This represents a significant saving of €64 compared to the rate from one year ago. Similarly, contracts tied to the 6-month Euribor, with an average rate of 2.103%, will see payments drop to €640, a €23 reduction from the last revision in April.
The critical change is seen in the 3-month Euribor, which has an average of 2.027%. This will cause the monthly payment to increase by €3 to €634. While the immediate financial impact is small, its significance is substantial, as it is the first such increase for this index since December 2023. This upward movement is a leading indicator that the period of falling or stable low rates is over.
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Several factors are contributing to these price changes, primarily the evolving monetary policy of the European Central Bank and broader macroeconomic indicators. Nuno Rico noted that while the current outlook is for a period of stabilization or slight, gradual increases through the end of the year, this could be altered by geopolitical or international economic shifts. The mortgage market is responding to these new conditions, with banks adjusting their own lending strategies and spreads in anticipation of future rate environments.
Buyer and seller behavior is expected to adapt to this new reality. The recent period of lower rates has fueled strong demand, particularly from young buyers, as evidenced by recent data on state-guaranteed loans. However, the prospect of rising payments may temper some of this enthusiasm and introduce more caution into the market. Real estate agency reports will be closely watched in the coming months to gauge the impact on transaction volumes and price negotiations.
The expected price trajectory for mortgage payments is now clearly upward. Nuno Rico predicts that homeowners with 6-month Euribor contracts will likely see their first payment increases in December 2025 or January 2026, with those on 12-month contracts following in the first quarter of 2026. He strongly advises families to use any remaining financial slack from the recent low-rate period to either amortize their loans or renegotiate their contracts to secure more favorable terms before the increases take full effect.
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