Deposit interest rates have been falling for 16 months. They yield less than 1.5%

The remuneration of new term deposits from individuals fell in May for the 16th consecutive month, to 1.49% , reaching the lowest value since May 2023, indicated the Bank of Portugal (BdP).

According to data from the banking supervisor, the average interest rate on new term deposits from individuals fell by 0.15 percentage points (pp) in May compared to April and compares with 2.72% in the same month of the previous year.

This is the lowest remuneration for term deposits by Portuguese banks since May 2023 (1.39%), after reaching a 12-year high of 3.08% in December of the same year.

Since then, this rate has been falling consecutively.

At the end of May, the amount of new term deposits from individuals reached 13,093 million euros, 123 million euros more than in April and 23.4% above the same period last year.

The average interest rate on new deposits with a term of up to one year fell by 0.15 pp between April and May, to 1.50%. Despite the reduction, this “continued to be the term class with the highest average remuneration and represented 95% of new deposits in May”.

In the European context, the average also registered a fall, of 0.11 pp in May, standing at 1.87%.

Portugal dropped one position among the euro area countries and remained in fourth position among the countries with the lowest average interest rate.

Among companies, the average remuneration for term deposits rose from 2.01% in April to 1.84% in May, with new deposits totaling 9.101 billion euros (minus 747 million euros quarter-on-quarter and plus 20.1% year-on-year).

After a period of stimulus in deposit remuneration – with the increase in key interest rates – the associated interest rate fell again.