Euribor Rates Increase Across Key Maturities, Affecting Housing Loans
The primary Euribor interest rates recorded increases on Friday, continuing a trend of market instability that has implications for variable-rate housing loans in Portugal. The rate changes were observed across the three-month, six-month, and twelve-month maturities, which are the main benchmarks for consumer and corporate lending in the Eurozone.
The six-month Euribor, which has been the principal reference for new mortgage contracts in Portugal since January 2024, rose by 0.007 points to 2.069%. This followed a previous session where the rate was at 2.062%. The movement in this specific rate is closely watched by homeowners and financial institutions due to its direct impact on monthly mortgage payments for a significant portion of the market.
Data released by the Bank of Portugal for June indicated that the six-month Euribor is tied to 37.74% of all variable-rate loans for permanent primary residences. This makes any fluctuation in the rate a key factor in household financial planning across the country. Real estate agencies and mortgage brokers are advising clients to review their loan conditions in light of this ongoing volatility.
The twelve-month Euribor also experienced an increase, rising by 0.014 points from 2.101% to 2.115%. According to the same Bank of Portugal report, this maturity is used as the benchmark for 32.28% of housing loan contracts. The three-month Euribor, which accounts for 25.58% of contracts, saw an increase of 0.015 points, settling at 2.047%.
This upward trend in borrowing costs is occurring as market participants anticipate the next monetary policy meeting of the European Central Bank (ECB), which is scheduled for September 10th and 11th in Frankfurt. The ECB's governing council decided to hold its key policy rates in July, following a cycle of eight consecutive cuts that started in June 2024. Financial analysts remain divided on the ECB's next move, with some forecasting a further rate cut in September while others expect rates to be held steady for the remainder of the year.
The mortgage market in Portugal is now adjusting to this new reality of rising rates. Banks and other lending institutions are recalibrating their product offerings, and some are reporting a renewed interest in fixed-rate mortgage products as consumers seek to shield themselves from future rate hikes. This shift in consumer behavior could influence the types of mortgage products that dominate the market in the coming months.
The July monthly average for Euribor rates had already signaled a reversal of the previous downward trend, with short-term rates showing slight increases. The current rate movements confirm this shift. Euribor rates are calculated based on the average interest rates at which a panel of 19 Eurozone banks lend to one another. Stay informed on Lisbon property market developments at realestate-lisbon.com.
