Updated: January 29, 2025
Portugal’s property market shone brightly in 2024, attracting considerable international attention and achieving remarkable success. With estimated sales reaching 30,000 to 31,000 million euros, it’s clear that Portuguese Real estate is booming. Around 168,000 properties were sold and bought during 2024, proving to be a prosperous moment for all things Portuguese.
When looking a housing credit, 2024 saw benefits for young people, relief for home payments and loan repayments.
Let’s delve into what all of this means, what happened during 2024, and, most importantly, what does 2025 have in store?
Portugal’s housing loan market saw a rise in dynamism, as more families looked for mortgages in order to purchase homes in Portugal. All of this was encouraged by the decline in Euribor rates throughout 2024, which helped banks to create eye-catching financial solutions to buyers.
Growth is expected to continue during 2025, when it comes to the demand for mortgages in Portugal. As Euribor closes in on 2 percent, many young people are taking advantage of government backed guarantees and exemptions to property transfer tax (IMT).
After high interest rates throughout 2022 and 2023, Euribor rates began to decline towards the end of 2023, which continued into 2024. In November of 2024, the 12-month Euribor rate was at a low of 2.5 percent, it’s lowest for two years!
This coincided with interest cuts from the European Central Bank (ECB), with the ECB targeting to stimulate the European economy whilst maintaining inflation to around 2 percent.
Global uncertainties, such as the new administration in the USA, may impact the pace of rate reductions in the future, with the ECB being cautiously approaching reducing interest rates.
Increased Demand for Mortgages in Portugal
The demand to find mortgages in Portugal increased during 2024, with €1.676 billion in new mortgage contracts drawn up in October 2024, according to the Bank of Portugal.
The total value of mortgages rose to €101.3 Billion; this is the highest it has been since 2015.
Factors that have driven this growth in 2024 include:
- Lower interest rates: Average rates on new loans dropped to 3.4 percent in November, boosting demand for mixed and variable rate mortgages.
- Tax benefits for young buyers: Young adults (under 35s) benefitted from IMT and stamp duty exemptions.
- Decreased mortgage payments: Lower rates resulted in reduced monthly payments, making it affordable to take out housing loans.
- Mortgage options from banks: Banks introduced competitive spreads and affordable prices.
- Higher loan amounts: Lower interest rates enabled families to borrow larger amounts.
What to Expect for Euribor and Mortgages in 2025
2025 looks set to bring several developments during the year.
- Euribor may drop to 2 percent: Euribor rates may continue to decline, reaching 2.1 percent in the up and coming months as the European Central Bank eases monetary policy.
- Continued support for young buyers: Young people may gain access to public loan guarantees. 18 banks are already prepared to offer these guarantees during 2025.
- Protection from future shocks: The bank of Portugal may re-visit their formula.
- Commission-free repayment: The fee exmeption will continue.
- No changes to interest deductions in IRS: Proposals were rejected and only homeowners are able to deduct 15 percent of interest.
- Improving transparency: Measures are being introduced to improve transparency and provide clarity.
- Greater protection for defaulting loans: A European directive that is aimed at protecting loans.
2025 seems likely to see some records broken, because of the continued demand for Portuguese real estate. The outlook is looking positive when securing financing for your property.
With interest rate cuts and new support for young buyers, 2025 is an excellent year to continue purchasing property in Portugal should you be seeking advantageous financial solutions.
