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Portugal’s Banks Lower Mortgage Margins Further in Battle for Market Share

5 October 2020 – The average interest rate applied to new housing loan contracts fell below 1% in August for the first time as Portugal’s banks continued to battle for business by reducing their margins. At the same time, Euribor has fallen further due to the pandemic-led deterioration in the economic climate.

According to the Bank of Portugal, the average interest rate on new mortgages fell by 11 basis points to 0.98%. New mortgages continue to benefit from falling Euribor rates and the banks’ continuing competition to attract business. Bankinter was the first bank to begin charging a spread below 1%, at 0.95%, and BCP and Santander both followed its lead this year.

As other banks such as Montepio and Crédito Agrícola have also lowered their spreads, only three banks (Novo Banco, CGD and BPI) still have margins above 1.2%.

Original Story: Jornal de Negócios – Patrícia Abreu

Translation/Summary: Richard D. Turner