According to the latest figures from the Luxembourg Central Bank (BCL), variable and fixed interest rates on home loans are spiralling out of control.

The average variable interest rate at the end of December 2022 was 2.58% compared to 1.34% at the end of 2021. Over the year, the volume of new contracts decreased by €10m.

The average fixed interest rate increased much faster. In 2022, it rose from 1.37% to 3.52%, i.e., an increase of 215 basis points compared to 124 basis points for variable rate loans. Over 12 months, the volume of new contracts fell by €265m. On contracts with a term of more than 10 years, the average rate rose from 3.31% to 3.54%. Over one year, the amount of credit granted contracted by €172m.

Consumer credit, although more expensive, remains dynamic. In 2022, the cost of such a loan over a period of 1 to 5 years stood at 4.37%, i.e., an increase of 16 bp with a volume of activity growing by €3m.

€1.949bn less credit for companies

The trends are similar for non-financial companies.

The variable interest rate on loans of up to €1m rose by 179 basis points over the year to 3.09%, while the amount of new loans granted fell by €69m.

For loans between €1m and €5m, the average rate increased by 165 basis points to 2.8% while volumes decreased by €1.949bn.

This story was first published in French on . It has been translated and edited for Delano.