Photo: Adobe Stock Author: Redaction Mortgage lending grows at fastest rate The total amount of mortgage lending in Portugal reached €119.062 billion in August, 11.2% more than in the same month of 2025. According to data from Banco de Portugal (BdP), this was the highest annual growth rate since February 2003. Compared with July, the outstanding amount of housing loans increased by €1.038 billion. Portugals growth also contrasts with the euro area, where mortgage lending increased by 3% over the same period. Higher house prices increase borrowing The rise in lending is also reflecting the evolution of house prices. Recent data from Statistics Portugal (INE) show that the average purchase price of a home reached €266,475 at the end of June. As housing costs continue to rise, buying a home requires greater financial effort. For many households, this also means taking out larger amounts of mortgage finance. Support measures and conditions affect demand Demand for housing finance has gained momentum in recent months, amid measures supporting home purchases by people aged up to 35, including the exemption from IMT property transfer tax and the public guarantee scheme. Changes in interest rates and the debt-service ratio limit have also contributed to earlier financing decisions. Since August, the limit has fallen from 50% to 45%, restricting the borrowing capacity of some households. Construction and property sectors follow trend The increase in mortgage lending comes as house prices remain high and housing supply continues to be constrained. This dynamic is also reflected in lending to companies operating in the sector. According to BdP, loans to construction and real estate activities grew by 11.2% year-on-year in August. Although this represents a slowdown compared with the previous month, growth remains in double digits. Mortgage lending is therefore growing in a market marked by high house prices, greater financing needs and changes to access to credit.
Photo: Adobe Stock Author: Redaction Bank valuations rise 14.7% in August Bank valuations of homes increased by 14.7% year-on-year in August, reaching €2,254 per square metre, according to INE. Despite reaching a new record, growth slowed from the 15.2% recorded in July. Compared with the previous month, the median value increased by €14. Setúbal Peninsula recorded the strongest monthly increase, at 1.6%, while the Algarve was the only region to register a decline, of 1.2%. See the evolution of house prices on SUPERCASA here . Flats record stronger increase By property type, flats recorded the strongest increase in bank valuations. The average value rose by 17% compared with August 2025, reaching €2,655 per square metre. For houses, year-on-year growth was 12.6%, bringing the value to €1,610 per square metre. Flats also recorded stronger monthly growth, increasing by 1.1%, compared with 0.2% for houses. Greater Lisbon maintains highest values The difference between property types is also reflected in bank valuation values. Greater Lisbon recorded the highest figures, at €3,487 per square metre for flats and €2,918 for houses. Across the regions, Greater Lisbon, the Algarve and Setúbal Peninsula recorded values above the national median. Alto Alentejo registered the lowest value, 54.1% below the countrys median. Number of valuations rises year-on-year Around 32,650 bank valuations were carried out in August, 3.1% more than in the same month of 2025. Compared with July, however, the number of valuations fell by 4.1%. INE data refers exclusively to valuations carried out as part of applications for mortgages to purchase a home. Bank valuations therefore do not directly correspond to the prices actually paid in transactions, as they only cover properties subject to bank financing.
Photo: Adobe Stock Author: Redaction Interest rates rise on home loans According to data released by the National Statistics Institute (INE), the implicit interest rate across all home loan contracts rose to 3.162% in August . This represents an increase of 2.7 basis points compared with the previous month and the highest level since October 2025. For financing intended for home purchases, the implicit interest rate also increased, reaching 3.148%. The rise in interest rates comes as the average outstanding loan balance continues to grow. Outstanding capital reaches new record In August, the average outstanding capital on home loan contracts increased by €725 compared with July, reaching €80,188. According to INE, this is the highest value since the statistical series began. The combination of higher outstanding capital and rising interest rates was directly reflected in mortgage payments. In August, the average monthly payment reached €418, €4 more than in the previous month and €24 more than in the same period of 2025. Of the total payment, around half corresponds to interest, while the remaining amount goes towards repaying the principal. New contracts have higher payments For contracts signed over the previous three months, the interest rate remained at 2.910%. For loans intended for home purchases, there was a slight decrease to 2.897%. Despite stable interest rates on new contracts, the average outstanding capital increased. For loans signed over the previous three months, the average amount reached €185,812, €3,336 more than in July. This increase in the amount borrowed also affected mortgage payments on new contracts. In August, the average payment reached €744, €13 more than in the previous month and 14.3% above the figure recorded one year earlier.
Photo: Adobe Stock Author: Redaction Households change their mortgage strategy Mixed-rate mortgages are gaining increasing ground in Portugal’s mortgage market. Contracts that combine an initial fixed-rate period with a subsequent variable-rate phase now account for more than 48% of the outstanding mortgage stock. This shift is taking place amid growing concerns about fluctuations in interest rates. Variable-rate mortgages, traditionally predominant in the Portuguese market, now account for around 47% of outstanding mortgage lending. Fixed-rate mortgages, meanwhile, continue to represent a much smaller share. The change in household preferences has become particularly evident in recent years. At the end of 2023, variable-rate mortgages still accounted for around 78% of mortgage lending, while mixed-rate contracts represented less than 18%. Mixed rates lead new contracts The shift is even more evident when looking at new loans. In July, mixed rates accounted for around 86% of new mortgage contracts , well above variable- and fixed-rate options. This model allows borrowers to benefit from a fixed repayment during an initial period defined in the contract. After this phase, the mortgage moves to a variable rate, usually linked to Euribor. The initial fixed-rate period can vary depending on the terms offered by the bank and the borrower’s choice. Among mixed-rate contracts, two years is currently the most common term for this initial phase. Predictability influences household choices The growth of mixed rates reflects a change in consumer behaviour towards mortgages. After years in which variable rates dominated lending, the possibility of securing a fixed repayment during the first few years has become more appealing. However, mixed rates do not completely eliminate the risk associated with changes in interest rates. Once the fixed-rate period ends, repayments depend on the conditions of the variable rate and movements in Euribor. Fixed rates, meanwhile, continue to account for a small share of mortgage lending. In July, they represented around 2% of new contracts, while variable rates accounted for 12%. The evolution of these mortgage models shows how lending market conditions and households’ perceptions of interest rates are influencing financing decisions when buying a home.
Photo: Adobe Stock Author: Redaction One borrower may have to cover the full instalment When two people take out a mortgage as borrowers, joint and several liability is common. In this case, each borrower may be liable for the full debt towards the financial institution. This means that if one borrower stops paying their share of the instalment, the other may have to cover the full amount to avoid falling behind. The way the couple has agreed to divide expenses does not, in itself, change the obligations set out in the mortgage agreement. For this reason, before buying a home together, it is important to understand who is registered as the owner, who signs the mortgage and what responsibilities each person assumes. Separation does not automatically change the agreement A separation or divorce does not eliminate the responsibilities assumed under the mortgage. Even if one borrower stops living in the property, they remain linked to the loan until the agreement is formally changed. If one of the partners wants to keep the property and take on the repayments alone, the bank must agree to the change in the mortgage arrangements. The lender will assess, among other factors, the income, expenses and other financial commitments of the borrower who wants to take on the financing alone. The change only takes effect with regard to the bank once it has been formally agreed. Until then, both borrowers remain subject to the obligations set out in the agreement. What happens if mortgage payments are missed? If one borrower stops paying and the other cannot make up the difference, both may face consequences. Default can lead to late-payment interest and other charges, and may also be reported to the Credit Responsibilities Centre. If financial difficulties arise, it is important to contact the bank quickly. Customers may have access to mechanisms designed to prevent or resolve situations of payment difficulties. One of these is PERSI, a negotiation procedure aimed at finding solutions between the customer and the financial institution. The bank must initiate this procedure between the 31st and 60th day after the missed payment, although the customer may also request to be included. Selling the property may be a solution When neither borrower can afford the mortgage alone and there is no agreement to keep the property, selling the home may be an alternative . Having a mortgage secured against the property does not prevent it from being sold, but the transaction must be coordinated with the bank. It is necessary to determine the outstanding capital and arrange its repayment in order to cancel the mortgage. If the sale price is higher than the outstanding debt and associated costs, the remaining amount will be divided according to ownership of the property and the existing legal arrangements. If the sale price is not enough to repay the mortgage in full, it will be necessary to clarify with the bank how the outstanding amount will be settled. To reduce risks, couples taking out a mortgage should agree in advance how repayments will be covered and what will happen if one borrower can no longer pay. Keeping proof of payments and contacting the bank at the first sign of financial difficulties can also help prevent the situation from getting worse.
Photo: Adobe Stock Author: Redaction 12-month Euribor rises again The Euribor rate showed different movements across the three main maturities on Tuesday. While the three- and six-month rates fell, the 12-month Euribor rose again, reaching 3.117%. This figure represents an increase of 0.001 percentage points compared with the previous session and is the highest level since August 2024. In contrast, the six-month Euribor fell by 0.001 points to 2.796%. The three-month rate dropped by 0.034 points, settling at 2.635%. Six-month rate is the most widely used The evolution of the six-month Euribor rate is particularly relevant in Portugal, as this maturity is currently the most representative in variable-rate mortgage contracts. Data from the Bank of Portugal for July show that the six-month Euribor accounted for 39.87% of the outstanding stock of loans for permanent own housing with variable rates . The 12-month Euribor accounted for 31.26% of this stock, while the three-month rate represented 24.40%. As a result, changes in Euribor rates can have a significant impact on the repayments of many mortgage loans. Monthly averages also increased The upward trend was also visible in the monthly averages for August. Across all three maturities, the Euribor rate recorded higher values than in July. The three-month average increased by 0.088 points to 2.513%, while the six-month rate rose by 0.066 points to 2.713%. Over 12 months, the increase was more significant, at 0.099 points, taking the average to 2.954%. The evolution of the rates is particularly relevant for anyone with a mortgage linked to Euribor, as changes to repayments depend on the maturity and the review date set out in the contract. ECB prepares new interest rate decision The ECB’s next decision comes after the central bank raised its three key interest rates by 0.25 percentage points in June, following a rise in global prices linked to the conflict in the Middle East. In July, the ECB opted to keep interest rates unchanged, with President Christine Lagarde indicating that September would provide an opportunity to assess new data before deciding on the next steps in monetary policy.
Source: Adobe Stock Author: Redaction July marks record high for mortgage lending Demand for financing to buy a home accelerated in July, ahead of new rules from the Bank of Portugal (BdP). That month, banks granted more than €2.3 billion in new mortgage contracts, the highest monthly amount ever recorded. Compared with June, the amount allocated to new loans increased by €166 million. New contracts were joined by a further €491 million relating to renegotiated mortgage loans, although this figure fell by €109 million in one month. The public guarantee aimed at young people continues to be cited as one of the factors driving demand for financing. Created at the end of 2024, the scheme initially had a €1.2 billion allocation, which was later increased by the Government to €2.4 billion. Households anticipate new BdP rules The record recorded in July may also be related to changes to mortgage lending rules defined by the BdP. The new measures came into force on 1 August and introduced changes to how customers debt service ratio is calculated. Anticipating these changes may have led some households to move forward with their financing applications before lending conditions became stricter. Banks may also have accelerated certain processes to complete transactions under the previous rules. The measures adopted by the regulator aim to moderate the growth in demand for credit, which has benefited from the boost provided by the public guarantee aimed at younger buyers. Average mortgage payment continues to rise BdP data also show an upward trend in the average monthly payment on mortgages. In July, the amount reached €411, after rising for the 11th consecutive month. This represents €5 more than in June and €23 more than at the end of 2025. The increase reflects both the evolution of existing contracts and the weight of new loans with higher average payments. Despite this increase, the average rate on new mortgage contracts stood at 2.96% in July, 0.02 percentage points higher than in the previous month. This was the fourth consecutive increase. Portugal maintains rates below the European average The rate applied to new loans nevertheless remains below that recorded in the euro area. The European average stood at 3.52%, while Portugal recorded one of the lowest rates in the region. The data therefore point to a mortgage lending market marked by strong demand, but also by new conditions for accessing finance. With the BdP changes now in force, the coming months should show whether the new framework can slow the pace of growth observed before the summer.
Source: Adobe Stock Author: Redaction Portugal stands out in the global market Portugal started 2026 against the international trend. According to an analysis by the Bank for International Settlements (BIS), real house prices in the country increased by 15.2% over one year, the highest growth among the 57 economies analysed. Although the increase remains significant, the pace of growth is slowing. Even so, house prices continue to follow a trajectory that differs considerably from that observed in most international markets. Portugal’s performance also contrasts with that of the euro area. Over the same period, real house prices in the region increased by 2.6%, while countries such as Spain and Italy recorded increases of 9.9% and 3.8%, respectively. Limited supply keeps pressure on prices Strong demand and a shortage of properties help explain the evolution of house prices in Portugal. The imbalance between buyers and available supply remains particularly evident in the lower-priced segments. At the start of 2026, rising interest rates and inflation affected household purchasing power, contributing to a decline in transactions. This situation is likely to have helped moderate house price growth, although it did not reverse the upward trend. Measures aimed at stimulating construction and housing are underway to increase supply. These include reducing VAT on construction to 6% and changes to licensing procedures. However, the impact of these measures is expected to take time to reach the market. Prices fall in several economies The international trend is quite different from that recorded in Portugal. The BIS points to a 1.2% decline in real house prices in the first quarter of 2026, following a 0.5% decrease at the end of 2025. In advanced economies, real prices fell by 0.2% year-on-year. Canada, the United States and the United Kingdom recorded declines of 7%, 2% and 2%, respectively. In emerging economies, the decrease was 2%, mainly due to the performance of Asian markets. However, house price developments were not uniform. Real house prices increased in 39 of the economies analysed, while four remained virtually unchanged and 14 recorded a decline. Global housing remains above pre-crisis levels Despite the recent decline, real house prices remain significantly above the levels recorded before the global financial crisis of 2007-2009. Worldwide, the cumulative increase stands at around 20%. Differences between countries are considerable, however. Turkey recorded a 117% increase compared with post-crisis levels, followed by India at 62% and the United States at 56%. At the other end of the scale, Italy and China continue to have real house prices below the levels observed after the crisis, with differences of 24% and 15%, respectively. The BIS data therefore show that residential market developments are far from uniform. While several economies are facing a correction in house prices, Portugal continues to experience strong pressure on property values, amid high demand and insufficient supply.
Source: Adobe Stock Author: Redaction Loans for buying homes continue to grow Household debt to banks for buying homes increased again in July. According to data from the Bank of Portugal (BdP), the mortgage lending stock reached €118 billion, setting a new all-time high. In a single month, the loan portfolio increased by around €1.2 billion. This is the largest monthly increase since December 2009, highlighting the continued strong momentum in the mortgage lending market. The increase comes amid strong demand for financing, following a period in which interest rates put pressure on household budgets and encouraged many borrowers to make early repayments on their loans. Public guarantee influences demand among young buyers Demand for mortgage lending has also been supported by access to the public guarantee scheme for young buyers. The mechanism came into force at the beginning of 2025 and aims to facilitate financing for the purchase of a first permanent home, subject to the applicable conditions. The programme initially had a €1.2 billion allocation, which was later increased to €2.3 billion. The measure has helped boost demand for financing among younger buyers. At the same time, changes to lending rules may have prompted some households to bring forward their financing applications before the new conditions came into force. Lower interest rates reduce early repayments The evolution of mortgage lending is also linked to changes in interest rates. After the high levels recorded in recent years, lower borrowing costs have made early loan repayments less attractive. In 2023 and 2024, many households chose to reduce their debt as repayments increased. With a less pressured interest-rate environment, this trend has weakened, contributing to the growth in total outstanding debt. Lending to households and businesses also rises The increase was not limited to mortgage lending. Total loans granted to individuals, including housing and consumer finance, reached €153.5 billion in July. Business lending also recorded positive growth. The stock of loans to companies increased by €438 million compared with the end of June, also reflecting greater use of bank financing. The data therefore show that mortgage lending continues to gain ground and reach new highs in a market marked by significant demand for financing to buy homes.
Source: Adobe Stock Author: Redaction Bank valuations continue to rise Bank valuations carried out for mortgage purposes continued to increase in July. According to the National Statistics Institute (INE), the median value reached €2,240 per square metre, 15.2% higher than in the same month of 2025. Despite the increase, growth was slower than in June, when bank valuations had risen by 16.6% year-on-year. Compared with the previous month, the median value increased by 0.5%, equivalent to €12 more per square metre. The monthly change was positive in most regions, with Alentejo recording the largest increase, at 1.3%. The Azores saw the biggest decline, at 1.9%. Apartments maintain higher values There are still significant differences between types of homes. For apartments, the bank valuation reached €2,627 per square metre, 16.5% higher than a year earlier. Greater Lisbon recorded the highest value, at €3,469 per square metre, followed by the Algarve, at €3,010. The figures were lower in the Centre and Alentejo, at €1,739 and €1,778 respectively. Alentejo recorded the strongest annual growth in apartment valuations, with an increase of 25.3%. Among apartment types, one-bedroom apartments recorded a monthly increase of €41, reaching €3,343 per square metre. Houses also see higher valuations For houses, the median bank valuation stood at €1,606 per square metre, representing a 13.6% year-on-year increase. Greater Lisbon and the Algarve again recorded the highest values, at €2,922 and €2,846 per square metre. The Centre and Alentejo stood at €1,163 and €1,300 respectively. Madeira recorded the strongest annual growth in this segment, at 17.8%. Compared with June, house valuations increased by 0.4%. Regional differences remain significant INE data show considerable differences between regions. In July, Greater Lisbon recorded a median valuation 51.7% above the national average. In the Algarve, the figure was 32.6% higher and, in the Setúbal Peninsula, 24.2% higher. At the other end of the scale, Beira Baixa recorded a valuation 52.9% below the national median, while Alto Alentejo was 52.5% below. INE also recorded 34,053 bank valuations in July, 1.4% more than in the previous month. This indicator covers properties valued as part of mortgage applications and does not directly correspond to the prices actually paid in property purchases.
Source: Adobe Stock Author: Redaction Before moving out, prepare your budget Moving out of your parents’ home means taking on new financial responsibilities. Before moving, work out your finances and consider rent and expenses such as water, electricity, food, transport, insurance and taxes. What you should do: Calculate your available monthly income. Separate fixed and variable expenses. Set aside money for annual expenses, such as insurance or taxes. Plan for these costs to avoid putting your budget under pressure when they arise. When choosing a home, do not only consider the rent. Add expenses such as water, energy, internet and commuting, which can make a cheaper home a more expensive option. Reduce the cost of household bills Water, electricity and gas can have a significant impact on your monthly budget. Small changes in your habits can help reduce these costs. Avoid wasting water, fix leaks and consider installing flow reducers. You can also reuse the water while waiting for the shower to heat up. With electricity, make the most of natural light, switch off equipment you do not use and choose energy-efficient appliances. In summer, reduce heat entering the home and, in winter, make the most of sunlight. Regularly compare electricity and gas tariffs using the ERSE simulator, the public entity that regulates energy services. Save at the supermarket without compromising quality Food is another expense that can increase when you start living alone. To avoid unnecessary spending, plan your meals and make a list before going shopping. First check what you already have at home and only buy what you need. Compare prices, take advantage of promotions when they apply to products you actually use and choose seasonal foods. Cooking at home can also help reduce spending on meals out. Preparing several meals at once, freezing food and using leftovers are simple strategies to reduce waste. Also avoid shopping when you are hungry or without a set budget. When necessary, use your phone’s calculator to keep track of the total cost of your shopping. Choose your bank account carefully When moving out of your parents’ home, compare maintenance fees, cards and other services before choosing an account. One alternative is a basic bank account. In 2026, annual charges are capped at €5.37, equivalent to 1% of the IAS. The Banco de Portugal also provides a fee comparison tool. As for credit cards, make sure you understand the associated costs and, whenever possible, pay the full balance within the deadline to avoid interest charges. Don’t overlook your taxes Living alone also means taking direct responsibility for your tax obligations. Keep track of the Tax Authority’s Portal, check your expenses on e-Fatura and maintain a calendar with your main obligations. Requesting invoices with your NIF, regularly checking reported expenses and being aware of possible tax benefits are simple habits that can help prevent losses and future problems. Also, do not leave tax or filing obligations until the last minute. Forgetting a deadline can result in unnecessary costs. Set money aside for emergencies Saving does not mean eliminating leisure spending. Set a monthly amount for these expenses and look for free or low-cost alternatives. Also build up regular savings, even if the amount is small, by setting up an automatic transfer to a separate account. This emergency fund should be used for unexpected expenses or loss of income, helping you navigate this new stage with greater peace of mind.
Source: Adobe Stock Author: Redaction Youth IMT allows you to buy a home without tax One of the main situations for IMT exemption in 2026 applies to young people aged 35 or under who purchase their first permanent residence. The benefit covers the purchase of a property or unit intended exclusively for this purpose. In mainland Portugal, full IMT exemption applies to properties worth no more than €330,539. Between this amount and €660,982, there is a partial benefit, with the rate applicable to that bracket being charged. Above €660,982, the specific Youth IMT benefit no longer applies. To qualify for the exemption, the other requirements established by law must be met, namely not being considered a dependent for IRS purposes in the year of acquisition. There are also rules concerning ownership of residential properties during the three years preceding the purchase. Other situations may qualify for exemption IMT exemption is not limited to the scheme intended for young people. The purchase of a permanent residence may also qualify for exemption when the value used as the basis for assessment does not exceed the limit of the first bracket applicable to this type of property. In 2026, this limit is €106,346 in mainland Portugal. There are also other specific schemes provided for in the IMT Code. These include the acquisition of properties for resale by taxpayers who carry out this activity and meet the legal requirements. The declaration of activity as a purchaser of properties for resale must be submitted before the acquisition. There are also exemptions associated with certain acquisitions made by credit institutions and transactions covered by specific urban rehabilitation schemes, provided that the requirements established by law are met. When can the benefit be lost? Obtaining an IMT exemption requires certain conditions to be met, both at the time of acquisition and afterwards: The property must actually be used as a permanent residence when this is the purpose of the exemption. Under the Youth IMT scheme, the requirements established to benefit from the IMT and Stamp Duty exemption must be met. The Tax Authority provides the necessary procedures on the Portal das Finanças to declare the acquisition and apply the codes corresponding to the tax benefits. Therefore, before buying a home, it is important to check the propertys value, the purpose of the purchase, the buyers age and whether they own other properties. Exemption rules can represent significant savings, but the application of the benefit always depends on compliance with the conditions established in the IMT Code.
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