The good news mortgage holders have been waiting for

news: The good news mortgage holders have been waiting for

Mortgage holders will continue to benefit from record-low Euribor rates this year.

BPI bank estimates that the three-month Euribor interest rate will remain at between 0.18% and 0.20% while the six-month rate will stay at around 0.34%.

Euribor rates with a maturity of three months and six months, the most commonly used interest rates to calculate mortgages payments in Portugal, registered a drop of more than 80% in 2012, which helped reduce monthly payments for a €150,000 loan, payable over 30 years, by up to €100.

Experts believe Euribor rates may drop even further but the good news for mortgage holders now is that rates will remain at the current record low levels this year.

Speaking to Público newspaper, Paula Carvalho, chief economist at BPI, said that Euribor rates would likely remain at the same levels as in December 2012.

Three-month Euribor currently averages 0.185% a month, which means it has dropped 87.02% on the December 2011 rate (1.426%).

Six-month Euribor closed the month of December at an average of 0.324%, or 80.6% down on the same month in 2011 (1.671%).

The 12 month Euribor rate, the least applied in mortgages in Portugal, recorded an average of 0.549% at the end of December – a decrease of 72.55% on 2011 (2.004%).

The European Central Bank (ECB) is responsible for deciding Euribor rates, which are fixed in the interbank market through the interest rate that banks are willing to charge for lending money between themselves.

The Euribor, the rate at which banks lend to each other, has been registering consecutive months of declines. This has led to the European mortgage index dropping to record low levels.

But Paula Carvalho has warned that families should be prepared for Euribor rates to start increasing again within two years.