Once upon a time, there was the Euribor.

The Euribor was created alongside the Euro, in 1 de janeiro de 1999, with the first rate being set in 30 de dezembro de 1998, and in effect from January 4th, 1999."

This rate is calculated daily by the European Banking Federation (EBF) and published by Reuters. Its release occurs at 11:00 AM (Central European Time) and is quickly disseminated by the press. It is widely used as a reference rate for bank loans.

What is the relationship between the Euribor and Mortgages?

The common practice in Portugal among institutions offering mortgages is to apply two types of interest rates: fixed and variable.

 It is in the variable rate where the Euribor comes into play, as this rate is indexed to it and works together with the spread, thus forming the interest rate on the mortgage you will pay.

Who and what defines the values of these rates?

It is not the Bank of Portugal, nor any other Portuguese bank. This is a reference rate that reflects what banks in the European Union charge to lend money to each other without collateral, through a panel composed of specific banks. 

Euribor rates typically follow the movements of the so-called reference rates, which are determined by the European Central Bank. And, at this moment, with inflation rising in the Eurozone, the ECB is expected to act by raising interest rates.

What are the maximum values of the Euribor?

For those who don’t remember, in 2000 and 2008, the Euribor values reached their peaks of 5% There is no good that lasts forever, nor any bad that never ends." in 2015, the rates hit the lowest values ever imagined.  

So what can I do?

If you intend to take out a mortgage, you can always request a feasibility analysis with a fixed rate, allowing you to choose the period during which it remains fixed. You can also include the variable rate at a certain point in the life of the loan.

Other ways to save include the possibility of requesting a spread review, transferring your mortgage, and reviewing your life insurance on your current loan.

Also read our article, Saving rhymes with economizing!

Note: The information about the Euribor evolution was sourced from https://www.euribor-rates.eu/pt/.