Good news for homebuyers in Portugal: mortgage interest rates have continued their downward trend in October, offering some respite to homeowners and prospective buyers. According to the latest data from the National Statistics Institute (INE), the average interest rate on housing loans fell to 3.180% in October, a drop of nearly 5 basis points compared to September. This marks a significant decrease of almost 1.5 percentage points since rates peaked at 4.657% in January 2024.
For newly signed mortgage contracts in the last three months, interest rates dipped even lower to 2.850%. This segment saw rates decline by over 1.5 percentage points since October 2023, showing steady improvements for new borrowers.
When it comes to monthly payments, homeowners are now paying an average installment of €394, just one euro more than the previous month, but €10 less than what was paid in October last year. Notably, for the second month in a row, the interest portion of the payment has remained below 50%—a shift not seen since April 2023. On average, interest payments accounted for €194 (49.2%) while capital repayments made up €200 (50.8%).
For new contracts signed within the last three months, the average monthly payment is higher at €667. This is a 5.2% increase compared to October last year, reflecting both larger loan amounts and the continued demand in Portugal’s real estate market. Indeed, the average outstanding capital for all home loans rose to €74,180, an increase of €684 from September. For recent contracts, this amount is even higher at €165,593.
With mortgage rates steadily falling and the balance between interest and capital repaid becoming more favorable, Portugal’s homebuyers may find 2024 a better year for securing new housing loans. Buyers are encouraged to review the latest rates and consider their options as the market continues to evolve.
