Euribor Falls on All Three Maturities — 6-Month Benchmark Drops to 2.453 While Eurozone Inflation Jumps to 2.6%

Portuguese mortgage holders received a modest piece of good news on Thursday as all three Euribor reference rates used to index variable-rate home loans declined — even as Eurostat revised eurozone inflation upward to 2.6 per cent for March, the highest reading since the Middle East conflict began disrupting energy markets.

The Euribor Moves

The 6-month Euribor — the benchmark for roughly 39 per cent of Portugal's variable-rate mortgages, and by far the most widely used reference in the country — fell to 2.453 per cent on 16 April, easing further from 2.468 per cent the day before. The 3-month rate retreated to around 2.22 per cent from 2.240 per cent, while the 12-month rate also dropped after settling at 2.756 per cent on 15 April.

The decline comes against a broader backdrop of the European Central Bank signalling it will hold rates steady at its April meeting while it waits for clearer data on the economic fallout from the Iran conflict. Markets are interpreting the Euribor's softening as evidence that traders expect rates to come down later in the year rather than rise further.

Eurostat Revises Inflation Upward

Any relief for households was tempered by Eurostat's flash estimate published the same morning, which revised eurozone inflation for March upward to 2.6 per cent from the 1.9 per cent recorded in February — a sharp move driven almost entirely by energy prices after the Strait of Hormuz disruption. Portugal sits just above the average at 2.7 per cent, a mid-range position among the 20 euro-area economies.

That figure complicates the picture for the ECB. Headline inflation is now running half a percentage point above the central bank's 2 per cent target, and the services component — which monetary policymakers watch closely as a measure of domestic price pressure — has not eased. Portugal's own inflation remains stickier than the eurozone aggregate largely because of food prices: the DECO PROteste essential food basket hit a record €259.52 this week, its sixth consecutive weekly increase.

What It Means For Mortgage Holders

A 6-month Euribor at 2.453 per cent compares with a peak of just over 4 per cent reached in the autumn of 2023, and a level of around 3.65 per cent at this time last year. For a €200,000 mortgage over 30 years, the decline from the 2024 peak represents savings of roughly €180 to €220 a month once the reference rate is updated at the borrower's next semi-annual revision.

However, the effect is staggered. Portuguese mortgage contracts typically revise the index every six or twelve months on the contract anniversary, not daily. Borrowers whose revision date falls in April will see the new 2.453 per cent figure; those revising in October will get whatever figure applies then, which could be higher if the energy shock feeds through into rates.

What This Means For Expats

Expats with a Portuguese mortgage — whether a D7 retiree, a digital nomad on a D8, or a recent arrival who bought property in 2023 when rates were peaking — will likely see some relief at their next revision. The 6-month Euribor is the default reference for most banks including Caixa Geral de Depósitos, Millennium BCP, Santander and Novobanco.

Two things to watch: first, the Hormuz energy shock is still feeding into the economy and could reverse Euribor's direction if the ECB is forced to respond to sustained above-target inflation. Second, Portuguese lenders have been slow to pass through rate cuts on new fixed-rate products, which remain more expensive than the cheapest variable-rate offers despite the recent decline.

For newcomers weighing fixed versus variable, the gap between a fixed 5-year rate (around 3.1 per cent at major banks) and the current variable 6-month Euribor plus typical spread of 1 per cent (giving roughly 3.45 per cent) is narrower than it has been in more than a year. If you expect rates to fall further, variable still wins. If you value certainty and the ECB's hawkish tone on energy inflation concerns you, fixed is no longer meaningfully more expensive.