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Housing credit: interest rates fall again in June



Interest on housing loans in Portugal fell again for the fifth consecutive month, having stood at 4.513% in June. This is good news for those who are paying house payments to the bank. Those who decided to apply for a housing loan between April and June also had a lower interest rate, of 3.729%, reveal data from the National Statistics Institute (INE) released this Friday. The recent drops in the Euribor may help explain this downward trajectory of interest rates in Portugal.


“The interest rate implicit in all housing credit contracts decreased for the fifth consecutive month, to 4.513% in June.”

Translating a drop of 4.3 basis points (bps) compared to May (4.556%), INE begins by explaining in the bulletin published this Friday, July 19th. After all, the interest on housing loans accumulated a reduction of 14.4 bps. since the maximum reached in January 2024 (4.657%).


For the purpose of financing the purchase of housing, “the most relevant in all housing loans”, the interest rate for all contracts fell for the fifth month, to 4.474% (-4.4 b.p. compared to May).


Taking into account all existing housing credit contracts in Portugal, the average value of the house installment stood at 404 euros in June, the same amount as the previous month.This is how the house payment in June is broken down:


  • Capital repayment: corresponds to 159 euros of the installment (39%);

  • Interest payment: concerns 245 euros (61% of the total).


It should be noted that the housing payment calculated in June is still 11.9% higher than that recorded a year ago (43 euros more are paid, on average). At that time, the interest component represented 53% of the average installment value (361 euros).


On the other hand, "the average outstanding capital for all contracts rose by 355 euros in June 2024 compared to the previous month, standing at 66,279 euros", the bulletin reads.


New housing loans have even lower interest rates


The recent drops in Euribor and the tendency to take out housing loans at cheaper mixed rates have contributed to reducing interest rates on new housing loans more significantly.


Perhaps this is why “in contracts signed in the last three months, the interest rate declined for the eighth month, going from 3.845% in May to 3.729% in June”, highlights INE. Interest on new home credits had an accumulated decrease of 65.1 bps. since the maximum reached in October 2023.


Also with regard to financing the purchase of housing, interest rates on the most recent contracts have been falling for eight consecutive months, having stood at 3.706% in June (12.0 bps less than the previous month).


These drops in interest rates have been reflected in the house payments. In contracts concluded in the last three months, the average installment value fell by 6 euros compared to the previous month, to 597 euros in June, which corresponds to a decrease of 2.0% compared to the same month of the previous year.


Even so, in contracts signed between April and June, the average amount owed was 125,942 euros, 1,426 euros more than in May.


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Source: Idealista

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