The interest rate on housing loans increased for the second consecutive month to 1.031%. With this new increase, home interests reached levels that had last been registered in 2016.
The implicit interest rate on housing loans increased for the second consecutive month. In April, it reached 1.031%, according to Statistics Portugal (INE). This increase lead the rates for all contracts to reach maximums of November of 2016, just as interest for new credit plunged again.
In March, the implicit interest rate reached maximums of January of 2017, increasing 1.023% in February and 1.025% in March. In April, the same tendency was registered, but there was a higher leap in the rate for all contracts: 1.031%. The monthly increase was the highest since October.
While the overall interest rates keep slowly increasing, the interest rates for new contracts keep their downward tendency. In April, it fell for the second consecutive month, to 1.559%.
But if interest rates for new contracts decrease, why is the overall rate increasing? Although they are decreasing, interests from new contracts are higher than the overall, they have a higher weight on the overall equation since they are higher amounts.
The average capital in debt for the overall credits is 51,817 euros, but the new credits granted in the last three months are 97,727 euros on average, INE reveals, and those credits have increased consecutively since April of 2017. Therefore, the interest rate for new contracts refer to much higher amounts, which propels the general interest rate.