Euribor Rates Show Mixed Movement: 3-Month Rate Falls, 6 and 12-Month Rates Rise
An announcement of price changes in the interbank lending market on Monday showed a divergence in the key Euribor rates, which are fundamental to the cost of mortgages in Portugal. The three-month Euribor rate decreased to 2.004%, while the six-month and 12-month rates both experienced an increase, rising to 2.1097% and 2.159%, respectively. These rates are the benchmark for the majority of variable-rate housing loans in the country.
A detailed breakdown of price movements by property type is not directly applicable, but the impact on different types of mortgages is significant. According to July data from the Bank of Portugal, the six-month Euribor is the most prevalent index, tied to 37.96% of the outstanding stock of variable-rate mortgages for primary residences. The 12-month Euribor follows, accounting for 32.09% of loans, while the three-month rate is linked to 25.51%.
The primary factors contributing to the price changes in Euribor rates are the monetary policy decisions of the European Central Bank (BCE). On September 11, the BCE opted to maintain its key interest rates, holding them steady for the second consecutive policy meeting. This decision followed a cycle of eight rate cuts that began in June 2024. The market had widely anticipated this pause. Real estate agency reports and market observations often cite these interest rate trends as a key influence on buyer affordability and overall market sentiment.
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Buyer and seller behavior is indirectly influenced by these rates. The slight increase in the six and 12-month rates could translate to marginally higher monthly payments for a large portion of Portuguese homeowners, potentially affecting household budgets and purchasing power. The mortgage market response and lending conditions are directly tied to these benchmarks, with banks adjusting their own lending rates in accordance with Euribor movements.
The recent movements offer a comparison with neighboring regions or similar markets within the Eurozone, as all are subject to the same underlying Euribor rates. The decision by the BCE to hold rates reflects a cautious approach to the Eurozone's economic outlook. The next monetary policy meeting, scheduled for October 29-30 in Florence, Italy, will be a key event for determining the future direction of these rates. The expected price trajectory for borrowing costs remains uncertain, with markets looking for clearer signals from the BCE. Stay informed on Lisbon property market developments at realestate-lisbon.com.