Portuguese mortgage interest rate rises for fourth month to 3.194% in September

Fourth monthly rise in a row

The National Statistics Institute (INE) reported on Wednesday, 21 October, that the implicit interest rate across all housing loan contracts rose to 3.194% in September, 3.2 basis points above August's 3.162%. It is the fourth consecutive monthly increase and the highest level since September 2025, when the rate stood at 3.228%. The increase follows the rise in Euribor rates, which feeds into loans that track them.

The implicit interest rate across all housing credit contracts rose to 3.194% in September, a 3.2 basis point increase on the previous month.

Rates and payments on new loans

Loans signed in the last three months carried an average rate of 2.959% in September, up from 2.910% in August, according to INE. The average monthly payment across the whole portfolio was 423 euros, five euros more than in August and 30 euros above September 2025. For contracts signed in the last three months, the average payment rose 13 euros to 757 euros, a 13.7% increase on September 2025. Mixed-rate loans, which banks are actively promoting, explain much of the gap between recent contracts and the total portfolio.

Interest now takes over half of payments

Of the 423-euro average payment, 213 euros went to interest and 210 euros to repaying capital. The split flipped in favour of interest for the first time since August 2025. INE said the interest share reached 50.4% of the average payment in the last month.

In the last month, the interest portion accounted for 50.4% of the average payment.

The average capital still owed across all housing loans rose 655 euros to 80,843 euros. For contracts signed in the last three months, the outstanding capital reached 187,246 euros, 1,434 euros more than in August. The portfolio-wide data show Euribor increases reaching a considerable share of older loans.

Euribor climbs again

On Wednesday, 21 October, Euribor rose for a third straight session at three, six and 12 months. The three-month rate reached 2.670%, the six-month rate 3.030% and the twelve-month rate 3.263%. Banco de Portugal data for August show the six-month rate underpinned 40.3% of variable-rate stock for owner-occupied permanent residence loans, against 31.03% for the twelve-month rate and 24.27% for the three-month rate. Euribor is the average of the rates at which a panel of 21 eurozone banks lend to one another.

ECB decisions and what comes next

The European Central Bank raised its key rates by 25 basis points on 10 September, as markets had expected, after holding them in July. Its June move was the first increase since September 2023, following a seventh consecutive hold in April. The bank had made eight cuts after starting its easing cycle in June 2024. The next monetary policy meeting is scheduled for 28 and 29 October in Frankfurt.