Monthly mortgage payments rise sharply for Portuguese households in October
Portuguese families with variable-rate home loans face their largest single increase in monthly mortgage payments in three years this October, after the Euribor benchmarks used to calculate interest rates climbed across all maturities in September. The rises, driven by European Central Bank rate decisions, will add between €25 and €91 to monthly bills depending on the type of contract.
Consumer rights organisation DECO Proteste calculated the new payments based on the September averages for a standard loan of €150,000 over 30 years with a 1% spread — the bank's margin on top of the benchmark rate. For context, €150,000 represents roughly half the price of an average apartment in Lisboa. The monthly increase of €91.24 on a 12-month Euribor contract exceeds the cost of a month’s average utilities and represents a significant strain on household budgets, especially when combined with rising food and energy costs.
What changes for each contract type
The increases affect all variable-rate mortgages up for review in October, with the impact varying by the Euribor reference in each loan agreement:
• Euribor at 12 months: The September average settled at 3.247%, the highest since July 2024. Monthly payments rise by €91.24 to €737.65. This benchmark represents 31.26% of Portugal's variable-rate housing loan stock, according to Banco de Portugal.
• Euribor at six months: The most widely used benchmark, accounting for 39.87% of variable-rate mortgages, reached a September average of 2.922%. Payments increase by €50.64 to €709.39 per month.
• Euribor at three months: With a September average of 2.635%, this index pushes payments up by €24.76 to €684.92 monthly. It covers 24.40% of outstanding variable-rate loans.
The Euribor rates — determined by averaging the interest rates at which 21 major eurozone banks lend to one another — are the primary index for variable-rate mortgages in Portugal. When the rate rises, so does the monthly payment for any loan linked to it.
Why rates are climbing
The September surge in Euribor benchmarks follows the European Central Bank's decision on 10 September to raise its key interest rates by 25 basis points, with effect from 16 September. The ECB had already increased rates in June 2024, marking the first such moves since September 2023 after a cycle of eight consecutive cuts beginning in June 2024.
ECB policymakers cited persistent inflationary pressure — partly linked to energy prices amid Middle East tensions — as the reason for maintaining a tight monetary policy. The central bank's next monetary policy meeting is scheduled for 28 and 29 October in Frankfurt.
How Portuguese households can respond
DECO Proteste advises borrowers to take proactive steps before their next rate review:
• Renegotiate with your bank to seek better conditions, such as a switch to a mixed-rate contract with a fixed period of up to two years.
• Compare offers from other institutions, as transferring the loan may yield a lower spread.
• Use simulation tools to anticipate future payment increases.
• Make early repayments if you have savings, choosing either to reduce the monthly payment or the loan term.
Banco de Portugal introduced new macroprudential rules on 1 August 2024, lowering the maximum debt-service-to-income ratio to 45% for new loan agreements. These rules aim to ensure new borrowers maintain sustainable debt levels but do not alter the conditions of existing variable-rate contracts facing October's increases.
For a loan of €250,000, the monthly increase could exceed €130. Borrowers should review their current rate type, the month of their next scheduled review, and whether their household budget can absorb higher fixed costs for essentials such as housing, food, and energy.
