Will home loan payments decrease with the decrease in interest rates?

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The European Central Bank (ECB) lowered, for the first time since 2016 and from a monetary tightening cycle since 2022, the three interest rates.  

The rate cut was by 25 basis points, with the fixed rate for main refinancing operations falling to 4.25%, the permanent liquidity-providing facility to 4.5%, and the permanent deposit facility to 3.75%.

After two years of consecutive increases, this is the first decrease in the three interest rates. Does this decrease have a relationship with variable rate housing loan installments indexed to Euribor? From what can be read on Notícias ao Minuto, DECO PROteste explains that "there is no direct relationship between this ECB decision and housing loan installments, which are indexed to Euribor (in contracts with variable rates)", since "the Euribor rates were already falling, in response to greater control of inflation".  

So, "it only confirms a downward trend, although still timid." "In June, for example, all variable interest rate contracts decreased," can still be read in the explanation.

In other words, the installments of these loans will continue to be reviewed according to the terms of the contracts - Euribor at three, six, or 12 months. "As for the Euribor, it is likely that a slow pace of descent will be maintained, which is reflected in small reliefs in the monthly payment of the house with each contract review. No significant drops are expected," the news reads.

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