Next month, a reduction in house installments is expected for contracts that will be reviewed in May, and this time, holders of contracts indexed to the 12-month Euribor will also see a reduction in the monthly payments made to the bank.
For a loan of 150,000 euros with a term of 30 years and a spread of 1%, the projections are as follows:
- Three-month Euribor: the installment over the next three months should be around 795 euros, a reduction of 3.37 euros (-0.42%) compared to the previous installment since February;
- Six-month Euribor: the installment expected over the next six months will be approximately 790.63 euros, a decrease of 25.18 euros (-3.09%) compared to the previous installment since November;
- 12-month Euribor: the payment over the next 12 months is expected to fall to around 778.32 euros, a reduction of 4.06 euros (-0.52%) compared to last year.
The 12-month Euribor recorded its first drop in the monthly home loan bill since January 2022, before the start of the conflict in Ukraine, at a time when interbank rates were already on the rise due to expectations of tightening monetary policy by the European Central Bank (ECB) to curb inflation.
Euribor rates are used to calculate the installments of variable rate contracts, which account for 90% of home loans in Portugal.
Last year, rates hit 15-year highs due to the ECB's efforts to combat inflationary pressures, but now, with signs of inflation stabilizing, the central bank is close to starting to reduce its reference rates, possibly from next summer. This results in a trend of easing Euribor rates, which is positive for families.
In April, average Euribor rates fell across the three main maturities, with the six-month Euribor recording its sixth consecutive month of decline, reaching its lowest value since July last year. The three-month Euribor has also fallen over the last four months, reaching its lowest level since October.
This easing trend is likely to continue in the future, depending on the ECB's monetary policy decisions. From July 2022 until September 2023, the ECB raised its rates by 450 basis points, interrupting the trajectory in September. The next meeting of the governing council is scheduled for June 6, and the last five meetings have kept rates unchanged.
The impact of the evolution of the Euribor on the value of the house payment will be determined by the amount of capital still owed. On average, families owe around 65,391 euros to banks on their home loans.
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