Interest rates for three and six-month Euribor have decreased, but the rate for 12 months has increased.
In a recent development, the six-month Euribor average rose slightly in July to 2.055%, marking a continuation of the general decline that has been observed across three-month, six-month, and twelve-month maturities since the start of the year[1][2][3].
This trend is evident in the data for June, where the three-month Euribor represented 25.58% of the 'stock' of variable-rate loans for permanent residential housing, the six-month Euribor represented 37.74%, and the twelve-month Euribor represented 32.28%[1][2].
The European Central Bank (ECB) maintained the key rates at their last monetary policy meeting on 24 July, but some analysts anticipate the maintenance of these rates at least until the end of this year[1][2].
The three-month Euribor rate fell today, dropping to 1.994%, while the six-month Euribor rate decreased by 0.005 points, now standing at 2.070%. In contrast, the twelve-month Euribor rate advanced in the twelve-month period, being set at 2.147%, remaining unchanged since June[1][2].
The downward trend in Euribor rates implies that variable-rate housing loans in Portugal linked to Euribor rates are likely experiencing moderate easing from the high rates seen earlier in the year. Since many Portuguese mortgages are indexed to three- or six-month Euribor, borrowers may benefit from slowing interest expenses as Euribor rates decrease, although rates remain significantly above zero and above the historic negative territory of recent years[1][2][3].
The effects on housing loans are notable. Initial rate hikes in early 2025 led to increased mortgage expenses, putting pressure on borrowers. However, the recent and forecast gradual decline in Euribor rates can ease monthly payments somewhat[1][2][3].
Despite the decline, Euribor rates remain elevated, with the three-month rate currently at 1.994%, the six-month rate at 2.070%, and the twelve-month rate at 2.147%. This means that housing loan rates are still higher relative to pre-2022 levels[1][2][3].
Banks, like Millennium BCP, indicate cautious pricing strategies in this environment, reflecting the balance between growth and interest margin sustainability[4].
Looking ahead, there are predictions of a new cut of 25 basis points in September, with the next monetary policy meeting of the ECB scheduled for 10 and 11 September in Frankfurt[1][2]. The three-month Euribor average rose slightly in July to 1.986%, but fell below 2% after four consecutive sessions above[1].
Euribor rates are set by the average of the rates at which a panel of 19 banks in the eurozone is willing to lend to each other in the interbank market[1]. Since June 2024, the ECB has made eight reductions in key rates[1].
In summary, Euribor rates are trending down in 2025 across all short and medium maturities, which should translate into some relief for variable-rate borrowers in Portugal, though rates remain substantially above the very low or negative levels of previous years, continuing to pressure housing loan costs[1][2][3][4].
[1] Source 1 [2] Source 2 [3] Source 3 [4] Source 4
The downward trend in Euribor rates may indicate a positive change for the finance sector, as lower rates could potentially lead to reduced interest expenses for businesses that have variable-rate loans.
The fluctuations in Euribor rates have significant implications for the business world, especially for those industries heavily reliant on variable-rate finance, such as real estate and housing construction, due to the high proportion of loans linked to Euribor rates.
