Portugal’s housing credit market is showing signs of recovery in early 2026, as lower interest rates begin to bring buyers back into the market.
According to data from the Banco de Portugal, new mortgage lending has increased following a period of contraction driven by higher interest rates throughout 2023 and part of 2024.
At the same time, the average interest rate on new housing loans has started to decline, reflecting broader movements in Euribor rates — the benchmark used in most variable-rate mortgages in Portugal.
Recent central bank indicators point to:
A gradual decrease in average mortgage interest rates
Increased demand for housing loans from households
Stabilisation in credit conditions after a restrictive phase
This shift marks a turning point after a period where rising borrowing costs significantly reduced purchasing power and slowed transaction activity.
However, while financing conditions are improving, they have not returned to previous lows.
Banks continue to apply strict lending criteria, including:
Affordability stress tests
Loan-to-value limits
Careful risk assessment on new borrowers
This means access to credit remains controlled, even as demand starts to recover.
From a market perspective, the implications are immediate:
More buyers are re-entering the market
Competition for available properties may increase
Downward pressure on prices is limited by renewed demand
In short, as financing becomes slightly more accessible, market activity begins to pick up again — reinforcing the broader imbalance between supply and demand.
Lower rates don’t just help buyers. They bring them back.
Source: Banco de Portugal
Date: January – March 2026 data (Bank Lending Survey and interest rate statistics)