Falling average mortgage interest rates: an opportunity to buy a house in Portugal?

The average interest rate on new mortgage loans in Portugal has been falling for almost a year, creating a favorable scenario for those looking to buy a home. This trend, driven by factors such as the drop in Euribor rates, opens up opportunities for those looking for more accessible and advantageous financing. With lower interest rates, is this the ideal time to invest in housing?

The fall in average mortgage interest rates: current context

According to the Bank of Portugal (BdP), the average interest rate on new mortgage loans has fallen continuously over the last 11 months. In September 2024, the average rate for new contracts was 3.47%, a significant drop compared to 3.55% in August. This trend reflects the monetary policy of the European Central Bank (ECB), which recently adjusted interest rates to boost the market.
Euribor rates, which directly influence housing loans in Portugal, have followed this fall, offering consumers some relief in their credit costs.

Amounts contracted and evolution of new loans

Despite the slight reduction in the value of new home loan contracts in September (totaling 1,545 million euros), this was the second highest amount since March 2022. This demand shows that, even with monthly adjustments, home loans continue to attract investors and buyers, possibly due to the opportunity created by lower interest rates.
Another relevant finding is the trend towards renegotiating contracts. With an average interest rate of 3.85% on renegotiated contracts, renegotiations also fell by 0.12 percentage points in September. This demand for credit renegotiation shows that consumers are attentive and interested in benefiting from the new market conditions.

The influence of Euribor rates and ECB decisions

Euribor rates, which condition a large part of mortgage loans in Portugal, have been reflecting the ECB's recent rate cuts. This reduction provides financial relief for those who already have loans and also creates opportunities for new credit contracts, as banks adjust their interest rates based on interbank indices.

Is this the ideal time to buy a house?

For potential buyers and investors, the continued fall in interest rates represents a window of opportunity. With falling interest rates and stability in the mortgage market, those planning to buy a house can benefit from more accessible and potentially profitable financing conditions.

The fall in average mortgage interest rates in Portugal is making buying a home more attractive and it could be the ideal time to act. With the downward trend in interest rates and the stability of the amounts of credit contracted, the market offers unique opportunities for those who want to invest in their own home or expand their real estate investment portfolio.

If you are thinking of buying a home or investing in real estate, IR Group can help you find the ideal property, with specialized support at every stage of the purchase and financing process.