The interest rates on new housing loans continue to rise, according to preliminary data from Luxembourg’s central bank. Archive photo: Matic Zorman / Maison Moderne

The interest rates on new housing loans continue to rise, according to preliminary data from Luxembourg’s central bank. Archive photo: Matic Zorman / Maison Moderne

Luxembourg’s central bank, the BCL, reported an 18 basis point increase in household mortgage rates, reaching 4.60% in July 2023. In a year-over-year comparison, the rate has surged by 326 basis points, while the volume of newly granted loans plummeted by €194m.

On Thursday 7 September 2023, the central bank of Luxembourg (BCL) initial figures concerning interest rates and loan volumes for euro area households and non-financial corporations (NFCs) for July 2023. The information was sourced from 49 credit institutions within Luxembourg.

Households’ mortgage loans

The variable interest rate on mortgage loans granted to households saw an increase of 18 basis points month-on-month, settling at 4.60% in July 2023. This marks an uptick compared to the 4.42% rate in June 2023, and represents a volume expansion of €3m, changing from €221m to €224m. Year-on-year, the interest rate soared by 326 basis points, according to the BCL, while the volume of newly granted loans fell sharply by €194m.

Real estate loans to households with initial rate fixation periods above 10 years dipped by 2 basis points to 3.71% in July. These loans shrank by €15m on a monthly basis, amounting to €210m in euros. On a year-on-year scale, the rate surged by 114 basis points, and the volume reduced by €69m.

Consumer loans and fixed-term deposits

Consumer loans with an initial rate fixation period above one year and up to five years increased by 24 basis points month-on-month to reach 5.05% in July. The volume of these loans declined by €1m to settle at €29m. On a year-on-year basis, the interest rate rose by 171 basis points, whereas the volume of new lending expanded by €3m.

Fixed-term deposit rates for households climbed to 287 basis points in July from 276 basis points in June, marking an annual rise of 272 basis points.

Variable rate loans by NFCs

For non-financial corporations, the variable interest rate on loans up to €1m escalated by 32 basis points to 4.40% in July, with the volume shrinking by €2m to arrive at €130m. On a year-on-year basis, the rate leapt by 309 basis points, and the volume dropped by €446m.

For loans exceeding €1m, the rate saw a 47 basis point increment to 3.11% in July, with the volume swelling by €268m to reach €2.086bn. Year-on-year, the rate ascended by 196 basis points, while the loan volume shrunk by €1.189bn.

The interest rate on NFC fixed-term deposits with an initial maturity of up to one year rose by 25 basis points to 3.27% in July, indicating a yearly surge of 294 basis points.

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