Euribor Rates Edge Down for Most, But 6-Month Contracts Face Increase; Interest Rate Stability Expected Through Year-End
Most homeowners with variable-rate mortgages will see a slight decrease in their monthly payments when their reviews take place in March. However, those whose contracts are indexed to the 6-month Euribor rate are expected to experience a rise in their installments. Changes will be minimal due to the current stabilization of interest rates.
The reviews occurring next month reflect the evolution of monthly Euribor rates, and February data – excluding today’s value – shows a decrease in the 3-month and 12-month Euribor rates compared to January. Conversely, the 6-month Euribor rate saw an increase.
Banks calculate the new March payment using the average Euribor rates from the previous month, February in this case. However, the comparison isn’t made to the previous month, but to the rate applicable during the last review. For example, for contracts indexed to the 3-month Euribor, the relevant rates for comparison are those of February 2026 versus those used in the last review, which were from November of last year. This comparison also shows a decrease, leading to a reduction in the monthly payment. The same applies to the 12-month Euribor when comparing February 2026 rates to those of 2025.
For contracts indexed to the 6-month Euribor, the comparison is between the February 2026 rate and the August of last year rate used in the last review. The increase in the rate between those two periods will result in a higher monthly payment.
In Portugal, over 90% of existing home loan contracts utilize variable or mixed rates, with 25% indexed to the 3-month Euribor. However, the 6-month Euribor is the most commonly used index, accounting for 38.5% of existing contracts. Contracts indexed to the 12-month Euribor represent 31.75% of the total.
The slight fluctuations currently observed in Euribor rates are largely attributable to the stability of the European Central Bank’s (ECB) monetary policy. Following a period of aggressive interest rate hikes by the institution, led by Christine Lagarde, to control inflation, rate cuts have been implemented at a slower pace. The ECB’s main interest rate, the deposit rate, rose from -0.5% in mid-2022 to 4% in September 2023. Rate cuts began in June 2024, with the latest reduction to the current 2% occurring in June 2025, and it has remained unchanged since then.
Market expectations are now for the ECB deposit rate to remain at 2%, at least through the end of 2026, which should translate to similar stability in Euribor rates across various terms, with slight increases and decreases. The Bank of Portugal, in its December 2025 Economic Bulletin, predicted the 3-month Euribor to decrease from 2.2% in 2025 to 2.0% in 2026, and then rise to 2.1% in 2027 and 2.3% in 2028, based on futures contract expectations.
Looking ahead to March, a decrease in payments is certain for those with contracts indexed to the 3- and 12-month Euribor. Conversely, those indexed to the 6-month Euribor will see an increase. For example, on a €200,000 loan over 30 years, indexed to the 12-month Euribor with a 1% spread, the monthly payment is expected to fall from €894.43 to €875.46, a decrease of €18.97. Using the same example, a contract indexed to the 3-month Euribor would see a decrease of only €3. And, with a 6-month Euribor-indexed contract, the increase would be €5.72.
Check your case:
How Your Home Loan Payment Will Evolve in March
30-year Loan with 1% Spread || Data up to February 26
3-MONTH EURIBOR
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6-MONTH EURIBOR
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12-MONTH EURIBOR
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Note 1 | How the Calculations Were Made
The calculations assume a principal balance of €50,000, €100,000, €150,000, or €200,000, depending on the example, with a 30-year term and a 1% spread. From that point, each time the contract is reviewed, the corresponding interest rate is applied, reducing the outstanding balance and the loan term.
Note 2 | What are Euribor Rates
Euribor stands for Euro Interbank Offered Rate. Euribor rates are based on the interest rates at which a group of European banks are willing to lend money to each other. In the calculation, the highest and lowest 15% of all quotations collected are eliminated. The remaining rates are calculated as an average and rounded to three decimal places. The value of Euribor rates is determined and published daily. There are five different Euribor rates, all with different maturities (one week, one month, three months, six months, and 12 months).
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