Luxembourg banks doled a total of €482m in mortgage loans in May 2024, according to data from the Central Bank of Luxembourg (BCL) provided by 73 reporting banks. Notably, €244m of these loans--nearly 51%--were fixed for over 10 years at an average interest rate of 3.65%. In contrast, a smaller portion amounting to €160m, or about a third of the total, featured initial rate fixations of up to one year, averaging 4.81%. This disparity highlights a significant spread of about 115 basis points that buyers are capitalising on, while banks are increasingly favouring longer lock-in periods.

Interestingly, homebuyers appear confident in current rate offerings, as evidenced by their preference for longer-term fixed-rate loans. Despite a 5.9% decline in loan volume compared to the same period last year, May 2024 marked a reversal from the 11.4% annual growth recorded in April 2024.

It is noteworthy that existing homeowners are consistently meeting their loan obligations, contrasting with the issuance of new loans by banks. As of the end of May 2024, the total outstanding loans for home purchases amounted to €40.825bn, marking a decrease of 0.24% from April 2024 and 1.15% lower compared to May 2023.