House installment rises €265 for loans of €150,000 over 12 months

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The house installment paid to the bank will rise in August for all contracts indexed to Euribor rates that are reviewed that month, worsening 265 euros in the 12-month term, according to the Deco / Dinheiro & Rights simulation.

A customer with a loan of €150,000 over 30 years, indexed to the six-month Euribor and with a spread of 1%, will pay €799.92 from August onwards, an increase of €96.02 compared to the last review in February.

In the case of a loan under the same conditions (amount and repayment period), but indexed to the three-month Euribor, the customer pays €775.43, €43.74 more than he has been paying since May.

With regard to loans indexed to the 12-month Euribor, the house installment – for the conditions mentioned – increases in August to €818.95, reflecting an increase of €265.12 per month.

This is the highest increase of the three indexes, because as those who have the credit indexed to Euribor 12 months the review only happens every year when it happens the increase in the installment is much higher.

These values were calculated taking into account the Euribor averages in July, which were 3.942% for six months, 3.672% for three months and 4.149% for 12 months.

The evolution of Euribor interest rates is closely linked to increases or decreases in key European Central Bank (ECB) interest rates.

After several years in negative territory, Euribor has started to rise more significantly since February 4, after the ECB admitted that it could raise key interest rates due to rising inflation in the eurozone.

Since July 2022, the ECB has raised key rates several times, which means customers are paying more for their loans, including housing loans.

Last week, the ECB raised interest rates again (the deposit facility rate rose to 3.75%, the interest rate on the main refinancing operations to 4.25% and the rate on the marginal lending facility increased to 4.5%) and the ECB President left further increases open.

Lagarde said that the outcome of the September meeting “could be a hike or a pause”, but it will definitely not be a cut and stressed that even if the ECB chooses to keep the three benchmark rates unchanged, this “does not mean it is final”.

“We are entering a period where we will depend on economic data,” he said.

The rise in interest rates in Portugal has a major impact on those who have housing loans, as 90% of home loans are variable rate, which means that the monthly installment goes up when Euribor rises.

To cope with the increases, thousands of families have already renegotiated loans and the Government has a measure to subsidize interest on housing loans.

Last week, in an interview with Público, the Finance Minister said that the Government will extend the support scheme for the subsidy of housing loans to more families and that he wants the bank to offer a fixed rate to those who already have loans.

Lusa questioned the Finance Ministry last week on whether it maintains the estimate of 100 million euros for the interest subsidy measure, or whether it has already been revised in view of the constant rise in Euribor rates, but received no response.

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