Housing Loan Interest Rate Falls to 3.385% in July
The implicit interest rate for all housing loan contracts fell to 3.385% in July, according to data released by the National Statistics Institute (INE). This figure represents a decrease of 9.4 basis points compared to the previous month. The rate has now seen a cumulative reduction of 127.2 basis points from its peak of 4.657% recorded in January 2024.
The INE report also provides specific data for new contracts signed in the last three months. For this group, the interest rate in July was 2.897%, a decrease from the 2.951% registered in June. This segment has experienced a total reduction of 148.3 basis points from the maximum rate observed in October 2023, indicating a significant easing of borrowing costs for new homebuyers.
In terms of monthly payments, the average for the total portfolio of housing loans was €394 in July, a value identical to that of the previous month. This represents an €11, or 2.7%, decrease when compared to July 2024. The composition of the average monthly payment was detailed by the INE, with €202 (51%) corresponding to interest payments and €192 (49%) to the amortization of capital.
For the subset of contracts finalized in the past three months, the average monthly payment saw a slight increase of five euros, reaching €636. This is a 3.9% rise compared to the same month in the previous year. This increase in the payment for new contracts occurs despite the falling interest rates, which can be attributed to other factors such as higher loan principals.
The average outstanding capital for the entirety of housing credit contracts also saw an increase. The figure rose by €593 from the previous month, bringing the average outstanding debt to €72,270. These statistics provide a comprehensive overview of the current state of the housing credit market in Portugal, reflecting the ongoing adjustments in interest rates and their impact on both new and existing mortgage holders.
The data from the National Statistics Institute is a key economic indicator, closely watched by financial institutions, policymakers, and consumers. The downward trend in interest rates may influence market activity and affordability in the real estate sector in the coming months. The INE will continue to monitor these trends and provide updated statistics in its subsequent monthly reports.
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