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Mortgage credit: variable rate once again surpasses fixed rate

Average interest rate on new variable rate loans increased to 4.37% in June, surpassing the fixed rate (4.16%).

Portugal is one of the European countries with the most mortgage loans granted at a variable (rather than a fixed) rate, which implies great uncertainty for families at times like the ones we are experiencing today, marked by increases in Euribor rates, which are climbing as a result of the increase in key interest rates by the European Central Bank (ECB).

In June, as had already happened in May, variable rates surpassed fixed rates on new housing loans, revealed the Bank of Portugal (BdP).

“The average interest rate on new housing loans contracted at a variable rate increased to 4.37% in June, surpassing the average interest rate on new fixed rate loans (4.16%)”,

This means that, in June, new loans granted by banks for the purchase of a house at a variable rate rose compared to May (4.20%) and compared to the previous year (1.19%). Financing indexed to a fixed rate decreased in relation to May and April (4.19%) and increased compared to June of last year (3.31%).

BdP data also allow us to conclude that the average fixed rate is now lower than the average Euribor rate, which is happening for the second consecutive month, which is unusual. Brake on new housing loans in June

In June, the amount lent by banks under new home loan contracts slowed down compared to the previous month, to 1,524 million euros (1,625 million euros in May). This is, however, a higher amount when compared to that recorded in June 2022 (1,402 million euros). The average interest rate on new home loans continues to soar, which rose from 4.16% in May to 4.25% in June, reaching the highest value since February 2012.

“In June, new lending operations to individuals totaled 2,165 million euros, 126 million less than in May. There were declines in housing and consumption purposes (by 101 and 31 million euros, respectively). Conversely, new loan operations for other purposes increased six million euros”,

BdP Bulletin.

The numbers show that new loans for home purchases accounted for most of the amount loaned to consumers in June: 1,524 million euros out of a total of 2,165 million euros.

Most of this amount (1,524 million euros) relates to variable rate loans, given that fixed rate loans continued to represent the smallest share in June (9.5%) and that the option for the mixed rate regime – fixed in the initial period and variable in the following period – represented 22.7%.

Read the full article here!

Source: Idealista


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