Portugal extends mortgage terms as borrowers brace for higher interest costs

From August, the Bank of Portugal will raise the maximum maturity of new housing loans for borrowers aged 30‑35 from 37 to 40 years and drop the previous 30‑year average‑maturity guideline. The change lowers the recommended debt‑service ratio from 50 % to 45 %, but it also means borrowers will pay more total interest over the life of the loan. Economist Nuno Rico of Deco Proteste warned that family indebtedness in Portugal is rising by about €37 million a day, far above the European average.

At the same time, the war in the Middle East and rising oil prices are prompting the European Central Bank to lift its key policy rate. A further increase from 2.25 % to 2.75 % by year‑end could raise monthly mortgage payments by roughly 7 % or more for borrowers whose loans are still linked to Euribor. With about half of Portugal’s outstanding mortgages indexed to Euribor, many households face a near‑immediate impact from any ECB rate hikes.