Portugal’s mortgage market is showing a clear shift in 2026: borrowing is increasing again, just as interest rates start to ease.
Recent figures indicate that housing loan activity is picking up after a slower period driven by high interest rates in 2023–2024. According to reporting based on central bank data, housing loans grew significantly at the start of 2026, reaching one of the strongest growth levels in nearly two decades. (Residential Advisory Portugal)
At the same time, the cost of borrowing is moving in the opposite direction.
Data linked to the Banco de Portugal and housing statistics show that mortgage interest rates have been declining steadily, with average rates falling to around 3.1% in early 2026, the lowest level since mid-2023. (Real Estate Lisbon)
This trend is closely tied to the evolution of Euribor, the benchmark rate used in most Portuguese mortgages. As Euribor levels stabilise or decline, borrowers are seeing improved conditions — especially in variable-rate contracts, which dominate the market. (bportugal.pt)
At the same time, demand for housing credit is beginning to recover. Surveys from the central bank indicate a slight increase in demand for home loans, suggesting that buyers who paused during peak rates are returning to the market. (bportugal.pt)
The result is a shift in momentum:
Lower monthly repayments compared to previous year peaks
Renewed appetite for financing among buyers
Increased competition for available properties
However, this does not mean financing is “easy” again.
Banks continue to apply strict lending criteria, including affordability checks and loan-to-value limits, maintaining a level of control over risk despite improving conditions.
For buyers, the takeaway is straightforward:
Financing conditions are improving
Demand is returning
But access to credit is still selective
In practice, this creates a familiar pattern — as soon as borrowing becomes cheaper, more buyers re-enter the market, which can quickly translate into renewed pressure on prices.
So while rates are going down, the window of “less competition” may not stay open for long.
Source: Banco de Portugal; housing credit data and market reporting (bportugal.pt)
Date: January–March 2026