Housing Credit Interest Rates Fall to Near Three-Year Low
The average interest rate on new housing loan operations in Portugal fell to 2.88% in July, marking the sixth consecutive month of decline and reaching the lowest level recorded since November 2022. The data was released on Wednesday by the Bank of Portugal.
The regulator's statement specified that the rate reduction was observed across both entirely new contracts and renegotiated loans. The average rate for new contracts decreased by 0.01 percentage points to 2.86%, while the rate for renegotiated contracts fell by 0.13 percentage points to 3.03%.
This continued decrease in borrowing costs occurred alongside a record volume of new lending. According to the Bank of Portugal, new loans to individuals rose by €291 million to a total of €3.033 billion in July, the highest figure in the historical series, which dates back to December 2014. New housing loans specifically accounted for €2.105 billion of this total, also a record high.
Portugal's rates remain competitive within the European context. The average rate for new housing loans across the euro area was 3.28% in July, placing Portugal as the country with the fifth-lowest rate. The data also showed that buyers under the age of 35 accounted for 59% of the value of new contracts for primary residences, a figure consistent with the previous month.
An analysis by rate type revealed that 70% of new housing loans were contracted using a mixed-rate formula, which combines an initial fixed-rate period with a subsequent variable-rate period. The average rate for these mixed-rate contracts was 2.77%. Meanwhile, the average rate for fixed-rate loans fell by 15 basis points to 3.36%, and the rate for variable-rate loans decreased by 11 basis points to 2.83%. Despite the falling rates on new loans, the average monthly mortgage payment for the total stock of existing loans remained stable at €413. Stay informed on Lisbon property market developments at realestate-lisbon.com.
