- The SPREAD, which is the profit margin that the bank collects for you, and which is defined based on the customer’s risk.
- The EURIBOR (Euro Interbank Offered Rate) is a reference tax that results of the average of the interest rates from Loans made between banks in the Euro Zone. Normally, mortgages contracts in Portugal are indexed to EURIBOR.
At the end of March, the Euribor shows a new drop at 3, 6, and 12 months, reaching a new record since January 2023.
In March, Euribor rates decreased again in the most common terms in Portugal (6 and 12 months) falling below 2.5%, one of the lowest values observed in the past two years. In fact, during the first sessions of March, the 12-month Euribor even dropped below the 2.4%.
At the end, how this successive drop of interest rate impact the Mortgage Sector in Portugal?
Banks, in a context of lower interest rates, are improving their offers. The commercial aggressiveness of the mortgage market is becoming increasingly visible, translating into excellent offers for new contracts and inevitably in more attractive monthly instalments.
Bank’s profit margins starting from 0.5%, even if promotional for a short term at the beginning of the loan, up to 0.65% profit margins for the entire maturity of the mortgage are once again a reality in the Variable Rate product offered by the Banks in Portugal.
According to financial analysts, Euribor rates still have room to drop further throughout 2025, potentially reaching 2%, although slower decreases are expected compared to those observed so far.
The main question is whether this consecutive drop of Euribor justifies the choice of a Variable Rate Mortgage, considering that we can still secure a Fixed Rate for the first 2 years, for example, at 2.65%. Wouldn’t a 2-years Fixed Rate of 2.65% offers better security? What do you think?
Regardless of the chosen option (Variable or Fixed Rate), it is undeniable that contracting a mortgage in this financial context of decreasing interest rates is the right choice!
So, why delay your dream of buying a home in Portugal as you always wished?
For any Questions, Please Don’t Hesitate To Contact Us!
