Average interest rates on new mortgage loans decreased to 2.85% in October, the lowest rate in the last three years, according to data released by the Bank of Portugal on Wednesday.
“In October, the average interest rate on new mortgage loan operations decreased for the ninth consecutive month, from 2.86% in September to 2.85%. This decrease occurred exclusively in renegotiated contracts, with the average rate dropping 0.04 pp to 2.88%. In new contracts, the rate remained at 2.84%. In the first ten months of 2025, the accumulated reduction in the average interest rate on new mortgage operations was 0.38 pp,” the report from the BdP stated.
Furthermore: “In October, the average interest rate on new housing loans in the euro area decreased by 0.02 pp to 3.30%. Portugal had the fifth lowest rate, standing 0.45 pp below the euro area average (0.15 pp in December 2024). Since the beginning of the year, Portugal has fallen four positions in the euro area country ranking.”
During the same month, new loan operations for individuals totaled 3,623 million euros, 143 million more than in September. These operations include new and renegotiated contracts.
New loan contracts for individuals increased by 150 million euros, reaching 3,085 million euros, the highest value in the historical series that began in December 2014. Credit renegotiations totaled 538 million euros, 8 million euros less than the previous month.
New loan contracts for housing and consumption reached historic highs. For housing purposes, the amount increased by 77 million euros to 2,160 million euros. Young people up to 35 years old represented 61% of the total amount of new contracts for permanent housing, a weight 1 percentage point (pp) above that observed in September and in line with the last eight months.
Housing Credit
In October, 73% of new housing loans were contracted at mixed rates, meaning a fixed rate for an initial period of the contract, followed by a variable rate period. Mixed rate contracts represented 42% of the stock of housing credit in October.
The average interest rate on new mixed rate operations remained at 2.75%. The average interest rate on new fixed-rate operations decreased by 0.04 pp to 3.42%, remaining above that observed in variable rate operations, which increased by 0.01 pp to 2.83%.
The BdP further revealed that in October, the average monthly installment of the stock of housing loans increased by 1 euro compared to the previous month, settling at 414 euros.
Companies
In October, the amount of new loan operations to companies totaled 2,540 million euros, 306 million more than in September. This evolution reflected an increase in the amount of new contracts (+298 million euros) and renegotiated contracts (+8 million euros).
New loan operations up to 1 million euros reached 1,295 million euros in October, 41 million more than the previous month. New loan operations above 1 million euros grew by 265 million to 1,245 million euros.
The average interest rate on new loan operations to companies rose by 0.06 pp, from 3.61% in September to 3.67% in October. This increase resulted from the rise in the average interest rate of loans above 1 million euros (+0.16 pp to 3.60%), offset by the reduction in the rate of loans up to 1 million euros (-0.02 pp to 3.73%).
