Portugal still has some of the lowest mortgage rates in Europe. But they are going up
Only Malta, Bulgaria, Spain and Croatia lend more cheaply than Portugal. But Euribor has been rising for months and the European Central Bank has raised rates again. What it means for your monthly repayment, in plain English.
In this article
- 01Mortgages in Portugal work differently
- 02What is Euribor?
- 03Portugal is still one of the cheapest places in Europe to borrow
- 04So why are rates going up?
- 05What the European Central Bank decided
- 06How much has this added to monthly payments?
- 07Fixed, variable or mixed: who feels the change
- 08What to do now
- 09Sources
Anyone with a mortgage in Portugal, or planning to buy a home here, has probably heard that interest rates are rising again. This article explains what is happening, with real numbers and in simple language.
Mortgages in Portugal work differently
In many countries a fixed rate is the normal choice. In Portugal it works differently: many mortgages have a variable rate, linked to a European reference rate called Euribor, and mixed-rate loans switch to Euribor once their fixed period ends. The monthly repayment moves with it.
This matters for foreign buyers. Someone used to signing a fixed rate for 5, 10 or 30 years will find the Portuguese system less predictable. That is not a problem in itself, but it should be understood before signing.
What is Euribor?
Euribor is the rate at which European banks lend money to each other. It is published every day and it is the same for every bank.
The formula is simple: Euribor + spread = the interest rate on the mortgage.
Euribor goes up and down over time, and no bank controls it. The spread is the lender's margin. It is written into the contract and only changes if you renegotiate it, with the same lender or a new one. So when Euribor rises, the rate on the mortgage rises too.
The payment does not change every day. It is only updated at fixed moments — every 3, 6 or 12 months — depending on which Euribor term is written in the contract.
Portugal is still one of the cheapest places in Europe to borrow
According to the latest European Central Bank data, for July 2026, Portugal had the fifth lowest average rate in the euro area on new mortgages.
| Country | Average rate on new mortgages (July 2026) |
|---|---|
| Malta | 1.94% |
| Bulgaria | 2.43% |
| Spain | 2.89% |
| Croatia | 2.91% |
| Portugal | 2.96% |
| Euro area average | 3.52% |
The gap is real: borrowing in Portugal was on average 0.56 percentage points cheaper than the euro area average. On a 200,000 euro loan, that is more than 1,000 euros of interest saved in the first year alone.
So why are rates going up?
Because inflation in the euro area is rising again, pushed up by energy prices and the conflict in the Middle East. When prices rise too fast, the European Central Bank raises its rates to slow them down. Euribor moves ahead of those decisions: banks expect higher rates, so they lend to each other at higher rates. That is why Euribor has been climbing for months. These are the most recent values:
| Euribor term | Rate on 9 September 2026 | Share of Portuguese mortgages using it |
|---|---|---|
| 3 months | 2.626% | 24.4% |
| 6 months | 2.800% | 39.9% |
| 12 months | 3.138% | 31.3% |
Shares refer to variable-rate loans on a primary residence, according to Banco de Portugal, the country's central bank and regulator, June 2026.
Two milestones show how big the move is. The 6-month and 12-month Euribor are at their highest levels in about two years, and on 21 August the 12-month rate went back above 3% for the first time since September 2024. It has stayed above that line since. Only the 3-month term edged down slightly on the last day.
What the European Central Bank decided
Euribor is not set by the European Central Bank. But it follows closely what the central bank does — and, above all, what the market expects it to do. On 23 July the ECB left its key rates unchanged.
On Thursday 10 September it raised them again. The three key ECB rates, the rates it sets for banks and which anchor borrowing costs across the euro area, went up by 0.25 percentage points. The deposit rate, the main reference, moved to 2.50%. The other two rose by the same amount, to 2.65% and 2.90%. The new rates apply from 16 September. It is the second increase this year, after June's.
The reason given was inflation, pushed up by the conflict in the Middle East. The central bank expects inflation at 3.0% this year and revised the following years upwards: 2.5% in 2027 and 2.1% in 2028. On what comes next, Christine Lagarde gave no hint.
“We are not taking a view as to which direction we go at our next meeting.”
The reason is uncertainty. With so much changing in geopolitics and in the economy, the ECB, in Lagarde's words, "simply cannot anticipate what exactly will be the next move". In practice this means nobody, not even the central bank, knows today whether rates will rise again at the next meetings, on 29 October and 17 December.
An ECB rate increase does not reach the monthly payment straight away.
Euribor usually moves weeks before the decision itself, and the payment only changes on the review date set in the contract. Several months can pass between the ECB decision and the change in the bank account.
How much has this added to monthly payments?
Portuguese households are already paying more. According to Statistics Portugal (INE), in July 2026 the average interest rate actually paid on mortgages rose to 3.135%, the second monthly increase in a row.
The average monthly payment across all mortgage contracts was 414 euros. That is 3 euros more than in June, and 20 euros more than in July 2025.
Twenty euros a month may sound small. But it is 240 euros a year — and this figure is an average across all contracts, including old loans that are almost paid off and loans with a fixed rate.
A recent loan, for a larger amount and on a variable rate, sees a much bigger increase than these 20 euros.
The 414 euros is a national average and includes old loans that are almost paid off. For someone who signed recently, the numbers look very different. These are the monthly payments on a 30-year loan with a 1% spread, using the Euribor rates from the table above:
| Loan amount | With 3-month Euribor | With 6-month Euribor | With 12-month Euribor |
|---|---|---|---|
| 150,000 € | 684 € | 699 € | 728 € |
| 250,000 € | 1,140 € | 1,165 € | 1,214 € |
| 350,000 € | 1,596 € | 1,631 € | 1,699 € |
Estimates for a new 30-year loan with a 1% spread, based on the Euribor rates of 9 September 2026. The real payment depends on the spread agreed, the amount still owed, the years left and the review date in the contract.
Fixed, variable or mixed: who feels the change
Not every mortgage reacts in the same way:
- Variable rate — the payment is updated on the next review date set in the contract. If Euribor is higher on that day, the payment goes up.
- Fixed rate — the payment does not change until the fixed period ends. The increase is only felt after that.
- Mixed rate — the contract has a fixed rate for the first years and becomes variable afterwards. It is worth knowing exactly which year that switch happens.
If you are not sure which one you have, the answer is in the contract and in the ESIS (European Standardised Information Sheet), the document the lender gives you before signing. Your bank's mortgage statement usually shows it too.
What to do now
- Find the Euribor term and the next review date in the contract. That date is when the change reaches the payment, not before.
- Check the spread. On contracts signed a few years ago, a better margin may be available today, at the same bank or at another one.
- Consider remortgaging with another lender. This is common in Portugal and it can lower the spread. But do the full sums first, including the cost of the switch and the insurance policies attached to the loan.
- Look at a fixed or mixed rate, if rising rates are a concern. They give a predictable payment, but the starting rate is usually higher than the variable one. Neither option is better in general: it depends on the household budget and how much movement it can absorb.
There is no single right answer. It depends on the amount still owed, the years left on the loan, the current spread, and the room in the household budget.
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
Average rates on new mortgages by country (July 2026, ECB Data Portal), the 10 September decision and the press conference: European Central Bank.
Implied interest rate and average monthly repayment (July 2026): Statistics Portugal (INE).
Share of each Euribor term in variable-rate mortgages (June 2026): Banco de Portugal.
Euribor values as of 9 September 2026: European Money Markets Institute (EMMI), the body that publishes Euribor.
