Mortgage payments fall to a new historic low in Portugal

Monthly cuotas will be reduced for all housing credit contracts, regardless of the associated index. Reductions range from 1.1% to 1.67%.

Photo by KOBU Agency on Unsplash
Photo by KOBU Agency on Unsplash
14 October 2020, Redaction

October brings good news for all Portuguese residents who have borrowed money from the bank to buy a house. Monthly mortgage installments will decrease for all housing loan contracts regardless of the associated index, namely 3-, 6- or 12-month Euribor. These drops also mean that mortgage installments in Portugal are at historic lows.

The cuts in installments will vary between 1.1% and 1.67%, with the shortest contracts benefiting the most, as reported by the online economic newspaper ECO. Mortgages indexed to the 3-month Euribor interest rate will be cut by 1.67%, which means that in a loan of 100,000 euros, for 30 years, and with a spread of 1%, households with contracts associated with this index will see their monthly mortgage installment fall by 5.08 euros, from 305.15 to 299.58 euros.

Monthly charges associated with home loans indexed to 6-month Euribor - the most common in Portugal - will also fall. These installments will fall by 1.42% to 300.82 euros, i.e. 4.33 euros below the 305.15 euros of the last revision.

Households with mortgages associated with a 12-month Euribor rate will benefit from a cut of 1.1%. In practice, and taking the same scenario into account, the value of the benefit will be set at 307.87 euros during next year. 

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