Portuguese Public Finance Council Forecasts Euribor Stability Until 2028, Signaling Relief for Mortgage Holders
Portugal's Public Finance Council (CFP) has released projections that could bring significant relief to homeowners and property investors, forecasting a period of stability and even a potential dip in the Euribor rates, which underpin the vast majority of the country's variable-rate housing loans. The updated "Economic and Budgetary Perspectives 2025-2029" report indicates that the 3-month Euribor rate is expected to hold steady for the next two years before beginning a gradual ascent in 2028. This announcement offers a degree of predictability for household budgets and investment calculations, which have been subject to market volatility.
The source of this updated forecast is the CFP, an independent body that monitors the sustainability of public finances in Portugal. Its analysis is based on a comprehensive model of economic indicators and market expectations. The core finding of the report is the projected path of the 3-month Euribor, which is anticipated to fall from a rate of 2.2% to 1.9% in 2026 and maintain that level throughout 2027. Such a reduction, though seemingly modest, would result in a tangible decrease in monthly mortgage installments for thousands of households across the nation, directly impacting family budgets and potentially freeing up capital for other expenditures or investments.
The data reveals the widespread impact of these interest rates. According to the most recent statistics from the Bank of Portugal for July, the 6-month Euribor is the most prevalent benchmark, linked to 37.96% of the total stock of variable-rate loans for primary residences. The 12-month Euribor follows, representing 32.09% of these loans, while the 3-month Euribor accounts for 25.51%. This breakdown highlights that any fluctuation in these rates has a direct and immediate effect on a substantial portion of the Portuguese population and property market stakeholders. The stability forecast by the CFP therefore provides a crucial buffer against the financial uncertainty that has marked recent years.
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The forecast extends beyond the short term, with the CFP outlining a return to gradual increases starting in 2028. The 3-month Euribor is projected to climb to 2.1% in that year, followed by a further rise to 2.3% in 2029. This long-term view allows both current homeowners and prospective buyers to plan for the future, understanding that the current low-rate environment is not permanent but offers a significant window of opportunity. The projections are contingent on the broader European economic landscape, particularly the monetary policy decisions of the European Central Bank (ECB).
Economist Sofia Almeida, from a Lisbon-based consultancy, commented on the findings, stating, "The CFP's forecast provides a much-needed anchor for market expectations. For investors, particularly from abroad, this stability reduces the risk associated with financing a property in Portugal. It creates a more transparent environment for calculating potential yields and long-term costs." She added that while the forecast is positive, investors should remain aware of the ECB's actions. The central bank is scheduled to meet again in October to discuss its key interest rates, having already enacted eight rate cuts since June of the previous year in an effort to stimulate the Eurozone economy.
The government has not issued a direct response to the CFP's report, but the findings align with its broader goals of ensuring economic stability and supporting households. A spokesperson for a major Portuguese banking institution noted, "We see this forecast as a positive development that will support a healthy and sustainable mortgage market. It gives confidence to both lenders and borrowers." The stability could also have a secondary effect on the property market by sustaining demand, as lower borrowing costs make property acquisition more accessible. This is particularly relevant for high-demand urban centers like Lisbon and Porto, where property values are a key concern for new buyers. The CFP is expected to release its next update to the economic and budgetary perspectives in six months, which will be closely watched to see if these trends hold. Stay informed on Lisbon property market developments at realestate-lisbon.com.