Portuguese families who borrowed money from the bank to buy a house and have contracts indexed to variable interest rates continue to benefit from a lifeline called “negative Euribor.” In other words, they have seen their mortgage payments drop practically month after month. In the case of contracts revised in October, monthly payments will fall again, regardless of the index: 3-, 6-, or 12-month Euribor. The cuts will vary between 1.29% and 2.5%, the largest in the last three years.
Mortgage contracts indexed to the 3-month Euribor, the shortest term, will see the lowest cut: 1.29% compared to the July review. However, this is the largest reduction since April 2016.
According to ECO's calculations, for a 30-year loan of €100,000 with a spread of 1%, the monthly payment will fall by €3.95 in October to €302.8.
In the case of loans indexed to the 6-month Euribor – the most commonly used in Portugal – the reduction will be 2.35%, also the largest since April 2016. This means that, using the same example above, the monthly payment to the bank in October will fall by €7.32 to €303.86.
Families with a loan linked to the 12-month Euribor will benefit from the largest reduction in installments since the October 2016 review: 2.5%. Assuming the same scenario, the installment will decrease by €7.76 to €306.31.
Source: idealistanews