Implicit interest rate decreases for the first time since March 2022

The implicit interest rate on home loan contracts fell in February for the first time since March 2022, falling 1.6 percentage points to 4.641%, the National Institute of Statistics (INE) reported on Monday.

“The implicit home loan interest rate fell to 4.641%, 1.6 basis points lower than the previous month, marking the first decline recorded since March 2022,” INE said.

In contracts signed over the past three months, the interest rate fell for the fourth month in a row, falling from 4.315% in January to 4.197% in February (-11.8 basis points).

For home finance purposes, the most relevant of all home loans, the implicit interest rate on general contracts fell for the first time since March 2022 to 4.606% (-1.7 basis points from January).

In contracts concluded over the past three months, the interest rate for this line of financing recorded its fourth consecutive decline, down 11.5 basis points compared to the previous month and amounting to 4.182%.

Taking into account all contracts, the average monthly payment cost fell for the first time since February 2021 to €403, one € less than in January but €81 more than in February 2023, representing a monthly decrease of 0.2% (+1.0% in the previous month).

Of the contribution amount, 248 euros (62%) correspond to interest payments and 155 euros (38%) correspond to amortized capital. In February 2023, the interest component was 41% of the average contribution value (€322).

In contracts concluded in the last three months, the average installment value decreased by 11 euros compared to the previous month, to 628 euros in February 2024, remaining 10.4% higher than the same month in 2023.

In February, the average outstanding capital for all home loans increased by €368 compared to the previous month to €65,158.

For contracts signed in the last three months, the average amount owed was €124,216, which is €994 less than in January.