House prices up 16.5% and rates rising in Portugal: why a sale can fall through after the CPCV
Portugal had the biggest rise in house prices in the European Union. The average rate on new mortgages reached 3%, and monthly repayments go up in October. Together, these numbers make it more likely that a purchase stalls after the promissory contract. Here is why, explained simply.
In this article
- 01How buying a home works in Portugal
- 02This week's numbers
- 03Prices rose faster than anywhere else in the EU
- 04Behind the scenes at the bank: the valuation
- 05Rates at 3% and higher repayments
- 06Why higher rates matter to the bank
- 07The time between the CPCV and completion matters too
- 08What to check before signing the CPCV
- 09Sources
Three numbers on housing and mortgages came out in the same week. House prices rose faster in Portugal than anywhere else in the EU. The average rate on new mortgages reached 3%. And if you have a variable rate, your monthly repayment goes up in October.
On their own, they look like market news. Together, they explain why some purchases stall after the buyer has signed the promissory contract. This article is for you if you are buying a home in Portugal, or if you are helping someone sell one.
How buying a home works in Portugal
In Portugal, a purchase usually has two steps. First, buyer and seller sign a promissory contract, the CPCV (contrato-promessa de compra e venda). It sets the price and the date of the sale. Later, on that date, you sign the deed (escritura) and the home becomes yours. In this article we call that day completion.
When you sign the CPCV, you usually pay a deposit (sinal), often a sizeable part of the price. Under the Portuguese Civil Code, if the sale does not go ahead because of the buyer, the seller can keep the deposit.
The bank decides on your mortgage between the CPCV and completion. That can take weeks or months.
If you sign the CPCV before the bank approves your loan, you commit without knowing the money will be there. If the contract does not say what happens when the loan is refused, or approved for less, your deposit is at risk.
This week's numbers
| Indicator | Value | Source |
|---|---|---|
| House prices in Portugal, Q2 2026 | +16.5% in a year | Eurostat |
| Average rate on new mortgages, August 2026 | 3% | Banco de Portugal |
| Average repayment on all mortgages, August 2026 | 446 € | Banco de Portugal |
| 12-month Euribor, September 2026 average | 3.247% | EMMI (Euribor), via Lusa |
House prices compare Q2 2026 with Q2 2025. The average repayment includes every mortgage still being paid, including older ones that are almost paid off.
Prices rose faster than anywhere else in the EU
According to Eurostat, the EU statistics office, homes in Portugal became 16.5% more expensive in a year. That is the biggest rise of any member state, ahead of Bulgaria (15.5%) and Lithuania (14.3%).
In the euro area, prices rose 4.0%. Across the EU, 4.7%. Between April and June 2026 alone, prices in Portugal went up 3.6%.
That is good news if you are selling. If you are buying with a mortgage, it creates a problem you may not see at first. The bank does not lend on the price you agreed with the seller.
Behind the scenes at the bank: the valuation
Before approving the loan, the bank sends an independent valuer to assess the home. The valuation can come in below the price written in the CPCV.
Banco de Portugal, the country's central bank and regulator, recommends that banks lend no more than 90% of the value of a main home. Banks call this the LTV, short for loan-to-value, which means the share of the home paid with the loan. The bank uses the lower of two figures: the purchase price or the valuation.
When prices rise fast, the valuation can come in below the agreed price.
If that happens, the bank lends on the valuation. You have to cover the gap with your own money by completion.
Three simple examples
A couple signs a CPCV for a home priced at 600,000 euros. They plan on a 90% mortgage, so 540,000 euros. They need 60,000 euros of their own.
The bank's valuation comes in at 560,000 euros. 90% of 560,000 is 504,000 euros. The loan is now 36,000 euros smaller.
The same maths for homes priced at 600,000, 400,000 and 200,000 euros, with the valuation about 7% below the price:
| Price in the CPCV | 600,000 € | 400,000 € | 200,000 € |
|---|---|---|---|
| Planned loan (90% of the price) | 540,000 € | 360,000 € | 180,000 € |
| Planned cash | 60,000 € | 40,000 € | 20,000 € |
| Bank valuation | 560,000 € | 370,000 € | 185,000 € |
| Approved loan (90% of the valuation) | 504,000 € | 333,000 € | 166,500 € |
| Cash needed | 96,000 € | 67,000 € | 33,500 € |
| Extra cash by completion | 36,000 € | 27,000 € | 13,500 € |
Illustrative figures, calculated by us with the 90% limit recommended by Banco de Portugal. Every valuation depends on the home, the area and the valuer.
The cash you need rises by 13,500 to 36,000 euros, depending on the price.
If you do not have that difference, the sale may not reach completion.
Rates at 3% and higher repayments
According to Banco de Portugal, the average rate on new mortgages reached 3% in August 2026. About 87% of new mortgages had a mixed rate, which means fixed for the first years and variable after that. Portugal has the fourth lowest average rate in the euro area, where the average is 3.6%.
The rise comes from Euribor. It is the rate at which European banks lend to each other, and variable-rate mortgages are based on it. Euribor tracked the rise in the European Central Bank (ECB) rates, decided on 10 September 2026.
DECO Proteste, the Portuguese consumer association, ran the numbers for a 150,000-euro mortgage over 30 years, with a 1% spread. The spread is the bank's margin on top of Euribor. These are the repayments from October:
| Euribor term in the contract | New repayment | Increase |
|---|---|---|
| 3 months | 684.92 € | +24.76 € (vs July) |
| 6 months | 709.39 € | +50.64 € (vs April) |
| 12 months | 737.65 € | +91.24 € (vs October 2025) |
DECO Proteste simulation for a 150,000-euro mortgage over 30 years with a 1% spread, using September 2026 Euribor averages.
On a bigger loan, the increase grows in the same proportion. On a 500,000-euro mortgage linked to 12-month Euribor, the same rates give a repayment of about 2,459 euros. That is about 304 euros more per month than a year ago. This is our own calculation, scaled from the DECO Proteste simulation.
Why higher rates matter to the bank
The bank checks whether you can afford the loan with an affordability limit. It is the share of your monthly net income that goes to loan repayments. Since 1 August 2026, Banco de Portugal recommends a limit of 45%.
If a couple earns 6,000 euros net a month, their repayments should stay within 2,700 euros (6,000 × 45%). The 2,459-euro repayment in the example fits, just. For other incomes, the maths is the same:
| Household net income | 45% limit on repayments |
|---|---|
| 6,000 € | 2,700 € |
| 4,000 € | 1,800 € |
| 3,000 € | 1,350 € |
| 2,000 € | 900 € |
Net monthly income × 45%. The limit recommended by Banco de Portugal adds up every loan repayment, not only the mortgage.
But the bank does not only use today's rates.
The bank tests your loan against higher interest rates, and adds every repayment you already make.
A car loan or a credit card counts. With higher rates, a repayment that seemed to fit on the day of the CPCV may no longer fit in the bank's assessment.
The time between the CPCV and completion matters too
When the bank approves your loan, it gives you the ESIS (European Standardised Information Sheet), called FINE in Portugal. It sums up the terms of the loan. Under Portuguese mortgage law, those terms stay valid for at least 30 days.
The law also gives you at least seven days to think before you sign. If completion is set after the offer expires, the bank can make a new offer at the rates of that day. With Euribor rising, the new terms may be worse.
What to check before signing the CPCV
- Get your mortgage assessed before you pay the deposit. Knowing how much the bank can lend, with the affordability limit already checked, avoids surprises later.
- Keep some cash in reserve for the valuation. With prices rising fast, plan for a valuation below the price.
- Check what the CPCV says if the loan is refused or approved for less. Ask a lawyer or solicitor to review this part of the contract.
- Set a realistic completion date, within the offer's validity. Give the bank enough time, without going past the days the ESIS is valid.
- If you are an estate agent: bring the mortgage in at the offer stage. A buyer whose loan has been assessed reaches the CPCV with less risk for everyone.
There is no single answer. The risk depends on the price, the valuation, the cash you have available, your income and the time left until completion. The decision to lend is always the bank's.
FINOVA compares offers from several banks and reviews each case individually. FINOVA's fee is paid by the bank, after completion. The mortgage process itself always has costs of its own: taxes, the property valuation and registration fees.
Sources
House prices in the European Union (Q2 2026): Eurostat, «House prices up by 4.0% in the euro area», 1 October 2026.
Average rate on new mortgages (August 2026): Banco de Portugal, BPstat. Average repayment (August 2026): Banco de Portugal, BPstat, housing credit. Statistical release of 1 October 2026, as reported by ECO (in Portuguese).
Repayment simulation: DECO Proteste, as reported by Jornal PT50 (30 September 2026, in Portuguese). September 2026 Euribor averages: European Money Markets Institute (EMMI), the body that publishes Euribor, with monthly averages calculated by the Lusa news agency.
Monetary policy decision of 10 September 2026: European Central Bank.
Loan-to-value and affordability limits: Banco de Portugal, press release of 2 July 2026 on the revised macroprudential recommendation, applicable since 1 August 2026 (in Portuguese).
ESIS validity and reflection period: Decree-Law 74-A/2017, consolidated version in the Diário da República (in Portuguese).
Rules on the deposit in a promissory contract: Portuguese Civil Code, article 442 (in Portuguese).
