Prolonged Fall in Mortgage Interest Rates Brings Relief
Mortgage interest rates fell again in October, marking the 21st consecutive month of declines and reaching their lowest level in the last two and a half years. This trend, although slower than at the beginning of the year, continues to translate into gradual relief for thousands of families with mortgages.

The implicit interest rate in contracts fell to 3.18%, reflecting the impact of the European Central Bank's monetary easing cycle. Since February of last year, the accumulated drop has already exceeded 1.5 percentage points, a direct result of the Selic rate cut, which follows the BC's decisions.

Despite this favorable movement, signs of stabilization are beginning to appear, with the slowdown in declines extending for the ninth consecutive month. Still, the immediate effect for loan holders remains positive, especially for those who have seen their installments rise sharply in recent years.

Monthly Payment Adjusts But Outstanding Capital Grows
Although mortgage interest rates are falling, the average monthly payment rose slightly to €394, one euro more than in September. However, it remains below the levels of a year ago, which confirms some relief from the most critical period of rising rates.

The interest component decreased to €194, while the amortized capital rose to €200, a sign of greater balance between the two elements of the loan.

However, the outstanding capital follows an opposite trend. In October, it increased to R$74,180, R$684 more than in the previous month. The total amount owed has been continuously increasing since 2020 and has already registered an increase of more than 40% in five years, driven by strong demand for housing and rising property prices.

What to expect from the future evolution of mortgage interest rates
The evolution of housing interest rates in the coming months will depend on the pace of ECB decisions and how inflation continues to behave. With the pause in interest rate cuts, the market anticipates a period of greater stability, although without immediate returns to pre-inflationary levels.

For families, this means that the phase of sharp reductions may be nearing its end, but the current environment is still more favorable than that experienced in 2022 and 2023. Those with contracts indexed to Euribor may continue to feel some relief, although at a less pronounced pace.

In this scenario, managing the family budget remains essential, especially in a context where debt capital continues to increase and the cost of housing remains high.