Euribor Flat: Portugal Homeowners Save €2 as Banks Cut Mortgage Spreads

The Portugal Central Bank has recorded a near-flat Euribor across all maturities for January, a move that will keep February mortgage bills virtually unchanged for the vast majority of households.

Why This Matters

• Tiny €2 drop on a typical €150,000 loan indexed to 12-month Euribor

• 6-month contracts frozen, so no February surprises for the 38% of borrowers on that index

• 3-month Euribor slips below 2%, opening a window for marginal savings when those loans reset

• Banks using the lull to advertise record-low spreads—but expect stricter approval rules, especially for non-residents

Snapshot of Current Rates

The first week of February shows the 12-month Euribor at 2.227%, the 6-month at 2.152%, and the 3-month at 1.999%—all hovering just above the psychologically important 2% line. January’s monthly averages, which define February payments, landed at 2.245% (12M), 2.137% (6M) and 2.028% (3M). For a standard €150,000 mortgage over 30 years with a 1% spread, the new calculation trims the monthly bill by roughly €2, down to €652. That modest dip may sound trivial, but after two years of roller-coaster rate hikes, predictability is suddenly the most valuable feature in a Portuguese mortgage.

Why Are Rates Flat?

Three forces are working in borrowers’ favour:

The European Central Bank has left its deposit rate at 2% for five consecutive meetings, signalling a pause in the tightening cycle.

Inflation in the eurozone has cooled faster than expected, dampening expectations of another jump in policy rates.

Futures markets price the 3-month Euribor at about 2.05% for most of 2026, with only a mild uptick projected after summer.Together, these factors keep the Euribor corridor narrow, anchoring mortgage indexes around the current plateau.

Bank Offers and Hidden Costs

Major lenders—Caixa Geral de Depósitos, Millennium bcp, Santander Totta, and Novo Banco—are dangling spreads as low as 0.6% to lure new clients. Some even promote a 0% spread for the first five years if borrowers bundle salary deposits, life insurance, and credit cards. Yet behind the glossy posters lie three caveats:

• Stricter loan-to-value caps for foreign buyers (60-70% versus the 90% norm for residents)

• A jump in compulsory cross-selling that can inflate the TAEG and final MTIC

• Profit-squeezed banks may offset cheaper mortgages with less generous savings-account ratesSavvy applicants should compare the full cost, not just the headline spread.

What This Means for Residents

For households whose contracts reprice this month, the impact is simple: status quo. Anyone on a 12-month review gets a small relief; six-month borrowers see a flat line; three-month clients enjoy the first sub-2% print since November. The stability gives families breathing room to set monthly budgets, renegotiate utilities, or channel extra cash toward principal prepayments. Landlords with buy-to-let loans can also lock in clearer rental yield projections, useful in a market where rents rose 7% last year.

Looking Ahead: Is Now the Time to Refinance?

Economists at the Bank of Portugal foresee the 3-month Euribor averaging 2.0% through 2026, while Bankinter pegs the 12-month rate near 2.5% by December. Those forecasts imply a slow taper rather than a dramatic fall. Homeowners eyeing a switch to fixed-rate products should weigh three questions:

When does my variable loan reset? A contract reviewed in late 2026 might still benefit from today’s lower index.

What fixed rate can I actually obtain? Offers below 3% are becoming scarce.

How long do I expect to keep the property? Breaking even on swap fees usually takes 4-6 years.For now, the sensible play is to monitor the quarterly Euribor prints. If the index threatens to climb above 2.5% again, a fixed-rate migration could shield a family budget. Until then, most borrowers can enjoy the rare scenario where doing nothing is the cheapest option.