Mortgage Interest Rate in Portugal Declines to 3.228% in September
The interest rate on housing loans in Portugal experienced a notable decrease between August and September, falling 7.9 basis points to 3.228%, according to data released this Thursday by the National Statistics Institute (INE). This development marks a significant moment, as for the first time since May of 2023, the interest component of the average mortgage payment now constitutes less than half of the total installment. The consistent reduction in borrowing costs signals a potential shift in the financial landscape for homeowners and prospective buyers across the country.
The INE report detailed that the current rate reflects a cumulative reduction of 142.9 basis points from the peak of 4.657% recorded in January 2024. This sustained decline points towards a normalization of rates following a period of sharp increases. For new contracts that were finalized within the last three months, the interest rate saw a more modest dip of 1.0 basis point, bringing the average for recent borrowers to 2.873%. This figure represents a total decrease of 150.7 basis points from the maximum rate for new contracts, which was observed in October 2023. Exploring the nuances of these trends is crucial for anyone considering property investment, and detailed information can be found by reviewing market insights from trusted sources.
Focusing on the primary driver of the housing credit market, the 'housing acquisition' category, the implicit interest rate for the total portfolio of contracts fell to 3.226%, a 7.5 basis point drop compared to August. For the most recent contracts in this category, the rate also decreased by 1.0 basis point from the prior month, settling at 2.872%. These figures suggest a broad-based easing of credit conditions, which could influence buyer behavior in the coming months. The financial aspects of purchasing property are often complex, and prospective buyers can benefit from understanding the potential financial concerns involved.
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In terms of real costs for borrowers, the average monthly mortgage payment for all outstanding contracts was €393 in September. This amount is one euro lower than in August and represents an €11, or 2.7%, decrease when compared to September of the previous year. A key detail from the INE's analysis is the composition of this payment: €195, or 49.6%, was allocated to interest, while €198, or 50.4%, went towards reducing the principal capital. The institute emphasized that this is the first instance since May 2023 where the interest portion has accounted for less than 50% of the payment.
Conversely, for contracts established within the last three months, the average monthly payment increased by €15 to €666. This rise corresponds to a 7.1% increase year-over-year and is indicative of the higher property values and loan amounts associated with recent transactions. The average outstanding capital for all housing loans also saw an increase, rising by €634 from the previous month to a total of €73,496. For new contracts, the average debt was substantially higher at €163,761, an increase of €2,440 compared to August. For international clients, navigating this market is often easier with the help of English-speaking real estate agents who can provide localized expertise.
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