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3 & 6-Month Euribor Rates Fall in March

4 March 2021 – Ana Custódio

According to a simulation by Deco/Dinheiro&Direitos, the average mortgage payment instalment in Portugal will fall in March for contracts indexed to the three- and six-month Euribor.

Thousands of families have halted mortgage payments since April 2020, taking advantage of the Portuguese government’s decree-law permitting a suspension of payments due to the Covid-19 pandemic. The initial timeframe for the moratoria has also been extended until September 30th of this year.

Last year, the decree-law was published, allowing a suspension of payments until March 31. As for this new date, the period of non-payment may not exceed nine months, counting from the notice given that the mortgage holder was suspending payments. The nine-month limit also takes into account any periods that have already been covered by a moratorium.

According to Deco/Dinheiro&Direitos’s simulation, a client with a 30-year, €150,000 loan indexed to the six-month Euribor rate, paying a 1% spread to the bank, will pay 447.40 euros as of this month, down by 5.72 euros since the last recalculation in September. A similar loan, indexed to the three-month Euribor rate, would require payments of 446.09 euros, 1.31 euros less than in December.

In February, the average 6-month Euribor rate was -0.521%, while the average 3-month rate stood at -0.541%. The six-month Euribor rate is the most commonly used, followed by the three-month rate, for bank contracts financing home purchases.

In negative territory since 2015, the expectation is that Euribor rates will remain negative or close to 0% in the coming years due mainly to the European Central Bank’s monetary stimulus policy, which positively impacts bank loans, lowering their long-term cost.

Translation: Richard Turner