Updated: February 12, 2025
Portugal continues to be a strong contender in the mortgage market. Recent data from the Bank of Portugal reveals remarkably stable levels of real estate lending.
While November 2024 saw a slight dip to €2,982 million in new loans to individuals—a decrease of €106 million from October—real estate credit remains robust, hitting €1,667 million.
Remarkably, this figure marks the second-highest value since data collection began in late 2014. This illustrates the strength of Portugal’s property market attracting global investors and expats. Notably, borrowers under 35 represented 48% of new permanent home ownership contracts in November.
Concurrently, average interest rates on new real estate loans decreased, from 3.4% in October to 3.29% in November. The Bank of Portugal noted that “the average monthly installment on housing loans decreased by €3 to €417 euros in November, the lowest since November 2023.” If you’re considering buying property in Portugal, now is a great time to invest.
Compared to other European nations, Portugal offers attractive interest rates, ranking seventh-lowest and below the 3.44% EU average.
Furthermore, the Bank of Portugal reported a 4.8% decrease in credit renegotiations—to €559 million in November— particularly in mortgage loan regenerations, which fell by €27 million.
Choosing the ideal mortgage can be difficult. The Bank of Portugal shows a growing preference for mixed-rate loans in recent months. In November, 76% of new mortgages were mixed-rate, a slight decrease of 1% from October.
Here’s what you need to know about mortgages in Portugal: Fixed-rate, variable-rate, and mixed-rate options:
Fixed-rate mortgages
- Enjoy consistent monthly payments with rates that remain stable, providing protection from Euribor fluctuations.
- Best for borrowers who want payment predictability over a set term, typically 3 to 30 years.
Variable rate mortgages
- Potentially benefit from lower rates based on market trends.
- Payments fluctuate with the Euribor index, recalculated every 3, 6, or 12 months based on mortgage terms.
- Rates depend on the lender’s set “mortgage spread.”
- Early repayment incurs a minimal charge on the outstanding balance.
Mixed-rate mortgages
- Combine the advantages of fixed and variable rates and you can get the rate for the first amount of time and then transition into a variable-rate mortgage.
- Offering flexibility and managing interest rate risks while experiencing initial payment stability.
