Updated: February 20, 2025
Portugal remains a competitive force to be reckoned with when it comes to mortgages. The latest data released by the Bank of Portugal (Banco de Portugal) shows Portugal to still be maintaining its historically high levels when it comes to real estate credit.
New Loans for Individuals Keep at an All-Time High
In November 2024, new loans to individuals totaled €2,982 million, which was a decrease of €106 million compared with October. Despite this decline, real estate credit continues to stand out, with the amount of new contracts reaching €1,667 million euros.
This value is the second highest ever recorded since the historical series began at the end of 2014. Breaking this down reflects the strong resilience of Portugal’s property market, which continues to move from strength to strength and attract investors and expats from across the globe. Significantly, loans to borrowers under 35 accounted for 48 percent of the new permanent home ownership contracts in November.
Interest Rates Very Attractive to Buyers
These numbers coincided with a further drop in the average interest rate on new real estate loans, dropping from 3.4 percent in October to 3.29 percent in November. The Bank of Portugal outlined that “the average monthly installment on no housing loans decreased by €3 to €417 euros in November, the lowest value since November 2023.” For potential property buyers considering buying property in Portugal, and debating whether now is a good time to invest, given the strength of the Portugeuse real estate market and low interest rates, the answer is a resounding yes when looking at it from this perspective.
How does Portugal compare to other European countries?
When compared with other European countries, Portugal presents competitive and attractive conditions, with the seventh lowest average interest rate and being below the average interest rate of 3.44 percent, according to the Bank of Portugal.
Furthermore, the Bank of Portugal has also stated that there was a 4.8 percent reduction in the volume of credit renegotiations – €559 million in November – with a particular focus on Portuguese mortgage loan regenerations, which decreased by €27 million.
Interest Rate Options for Mortgages in Portugal
For those considering taking out a mortgage in Portugal, knowing which mortgage option is best has proven to be a tricky one, as each buyer will have their own preference. However, according to the Bank of Portugal, there has been a preference amongst households for mixed-rate mortgage loans in the past months. In November, 76 percent of new mortgages taken out were mixed-rate mortgages, although this was a slight dip of 1 percent compared to October.
Below, you can see the different options regarding mortgages in Portugal: Fixed-rate mortgages, variable-rate mortgages, and mix-rate mortgages.
Fixed-rate mortgages
- With fixed-rate mortgages, mortgage rates that don’t fluctuate over time, and you can enjoy stable monthly mortgage payments.
- For those looking for a mortgage in Portugal that offers protection from Euribor rate fluctuations.
- Fixed-rate mortgages offer stable, consistent payments for a set term, usually between 3 and 30 years.
Variable rate mortgages
- With variable-rate mortgages, you can capitalize on market trends for potential lower mortgage rates.
- The estimated monthly mortgage repayment varies based on the Euribor index and may be recalculated every 3, 6, or 12 months, depending on the mortgage terms.
- The rate depends on the “mortgage spread”—a fixed percentage set by the lending bank.
- Early repayment incurs a minimal charge on the outstanding balance.
Mixed-rate mortgages
- You can take advantage of a combination of fixed and variable-rate mortgages for added flexibility.
- Mixed-rate mortgages allow borrowers to lock in rates for a certain period, then transition to a variable-rate mortgage, helping manage interest rate risks while enjoying some payment stability.
Getting a Mortgage in Portugal
Should you be considering taking out a mortgage to finance a property in Portugal, we recommend getting in touch with a mortgage broker and kickstarting the mortgage process as soon as possible. This will enable you to determine which properties are in your price range and the process can take longer than you may first expect.
If you are seeking the assistance of an independent mortgage broker at Goldcrest, we can put you in touch with our trusted partners, who can streamline the mortgage application process for you and help you put together the documents that you will need to present (e.g. bank statements, Portugeuse tax number, recent utility bill, etc.).
Want to find out how much you can borrow in Portugal? Find out now with our mortgage calculator.
