Euribor Slide Cuts Portuguese Home Loan Costs by €60 This Month

Home-owners across Portugal who renegotiate their mortgages this month are about to feel a welcome, if modest, breathing space. For a typical €150,000 loan over 30 years the new figures shave roughly €60 off the monthly bill, a signal that the steep drops of 2024 have cooled but are still drifting in the borrower’s favour.

What exactly changes for borrowers this month?

October’s reference rate for the 12-month Euribor averaged 2.08 %, down from 2.17 % in September. On a mortgage with a 1 % spread that difference translates to a payment sliding from €710.60 to about €646, or nearly 9 % less. Smaller spreads produce slimmer wins—Bank of Portugal simulators suggest clients paying a 0.93 % margin will save only €9.5 each month, or €113 a year—but the direction is identical: a lower benchmark means lower instalments.

A calmer Euribor after 18 months of turmoil

The 12-month tenor, still used by roughly one-third of Portuguese variable-rate contracts, is cooling even as its short-term cousin starts to tick higher. Analysts describe the current phase as “stabilisation rather than free-fall”, noting that the frenetic pace of cuts seen in late 2024 is fading. The European Central Bank’s summer easing cycle has already filtered through; markets now price the Euribor to sit near 3 % for much of 2025 before gliding toward 2.75 % in 2026.

Why the index keeps nudging lower

Three forces are doing most of the work. First, the ECB’s decision to hold key rates steady in September, while hinting at another trim before year-end, anchors expectations. Second, Euro-area inflation—2.2 % in September, scarcely above target—gives Frankfurt room to stay accommodative. Finally, GDP growth across the bloc (1.2 % forecast for 2025) remains tepid, prompting central bankers to keep financing conditions benign. Portuguese indicators mirror the pattern: the Banco de Portugal projects 1.6 % growth next year and inflation comfortably below 2 %, reinforcing the soft-rate narrative.

Winners, latecomers and a first bump for 3-month deals

The immediate winners are households whose contracts reset now on the annual cycle. Borrowers tied to 6-month Euribor—today the most common index, at 38 % of the market—also enjoy a cut, though the drop is the mildest since August 2024. The only group seeing a reversal are clients on the 3-month schedule; October delivers their first uptick after nearly two years of continuous relief. Even so, brokers say most families will escape payment shock thanks to income-cap schemes and the renegotiation law introduced last winter.

What to watch next

Attention now shifts to the ECB’s December meeting. A fresh quarter-point reduction would likely push the 12-month Euribor below 2 % for the first time since early 2023, setting up another—albeit smaller—discount for Portuguese households in early 2026. For anyone locking in a rate review today, the message is clear: the era of violent drops is ending, but the outlook still tilts gently, reassuringly, in the borrower’s direction.