Portugal’s mortgage interest rate fell to 3.13% in December, the 23rd monthly drop as Euribor eases. Installments ease slightly, but housing costs remain heavy.
Mortgage interest rates in Portugal continued their steady descent in December, easing to an average implicit rate of 3.13%, the National Statistics Institute (INE) reported. This marks the 23rd consecutive monthly decline as Euribor retreats from last year’s highs, offering some relief to households — but the overall housing bill remains demanding.
Why rates are falling
INE links the drop in mortgage costs directly to the fall in Euribor and the cooling of European Central Bank policy pressures. The implicit rate for all housing loans slipped to 3.130% in December — down 0.3 basis points from November and a cumulative 152.7 basis points below the January 2024 peak of 4.657%.
Newer contracts show a similar but milder movement: the average interest on loans signed in the last three months edged down from 2.853% in November to 2.850% in December, representing a 153-basis-point fall since their maximum in October 2023.
What borrowers are feeling
Despite lower rates, monthly payments remain substantial. For the entire stock of housing loans, the average monthly instalment was €397 in December — €3 higher than November but €6 (1.5%) below December 2024. INE notes that the interest portion of the instalment now stands at €194 (48.9%), while €203 (51.1%) goes to amortizing capital. For the fourth month running, interest accounts for less than half the payment, meaning more of each instalment is reducing outstanding debt.
New borrowers facing higher costs
Buyers signing contracts more recently are paying noticeably more. The average monthly instalment for contracts signed in the last three months rose by €7 to €675, a 6.8% increase year-on-year. This gap reflects higher house prices and larger amounts being financed by those entering the market today compared with borrowers who took loans earlier and are further along in amortization.
Outstanding capital and annual picture
Outstanding capital for all contracts rose to €75,270 in December — an increase of €600 from the previous month. Looking at the full year, INE reports that in 2025 the average annual interest rate for total housing loans was 3.414% (down from 4.372% in 2024). The average outstanding capital climbed by €5,806 to €72,314, while the average monthly instalment fell slightly by 2.0% (€8), to €396.
Bottom line
Falling Euribor and a softer ECB stance have steadily reduced mortgage rates, easing some pressure on monthly bills. But higher loan balances and still-elevated payments for recent borrowers mean housing costs remain a significant strain on Portuguese household budgets. Future movements will depend on Euribor trends and broader monetary policy decisions.
