Autonomous housing: new mortgages at an all-time high in October.

In Portugal, home buying by families applying for a loan from a bank continues. Despite rising interest rates and the continued high cost of living due to inflation, the volume of new mortgages reached a new record in October, with banks lending €1.88 billion. The average interest rate on new housing loans fell marginally to 4.25% and has remained virtually unchanged since June.

New housing loans worth €1.88 billion were contracted in Portugal in October.

This is the highest amount recorded by the Portuguese regulator since January 2003. Compared to September, the amount of new home loans increased by 7 million euros, the Bank of Portugal (BdP) reported on Monday, December 4.

"The average interest rate on new mortgages fell slightly from 4.25% in September to 4.23% in October," the Portuguese regulator points out. This is the highest interest rate since February 2012, when it reached 4.44%.

It is worth noting that mixed rate new mortgages are still the most popular. "In October, new mixed-rate mortgages - that is, fixed-rate loans for the initial contract period and then variable-rate loans - accounted for 64% of total new mortgages," the BdP data also indicate.

This trend has been noticed since mid-2022, when the variable rate started to rise sharply due to Euribor, and continues to intensify. Since then, the share of mixed-rate loans in the purchase of own homes and for permanent residence in Portugal has become increasingly significant. It should be noted that in August 2022, mixed rate loans accounted for just 8% of new home equity loans.

It can also be seen that "the increase in the share of new mixed rate transactions was reflected in a change in the mix of permanent residence loans," the regulator said. Between January and October 2023, the share of blended loans nearly doubled from 7% to 13.3% of total permanent residence loans.

The variable rate continues to dominate, however, accounting for 82.9% of total permanent residence loans. One year ago, in October 2022, variable rate mortgages accounted for 90.1 percent of the total.