Did you know that Euribor is the main indicator for most variable home loans in Portugal? Or is it also used to calculate interest on other financial products such as personal loans or bank deposits? We’ll explain what it is, how it’s calculated and how it affects citizens in a minute.
Euribor is the interest rate paid by banks in the eurozone for lending money. Even easier: it’s the price at which banks put money on the market and which serves as a benchmark for most home loans.
It is calculated daily, based on the average interest rates of the most active banks in the eurozone. There are several types of Euribor, depending on the term of the loan: one week, one month, six months or one year.
It is mainly used to calculate interest on products such as personal loans, bank deposits or mortgage loans. In Portugal, the six-month Euribor is the most commonly used for home loans.
For those with a mortgage, changes in Euribor directly affect the value of the loan. If the rate goes up, the monthly loan payment becomes higher. On the other hand, it gets cheaper when the Euribor goes down.
Source: Idealista.pt
