In January, the variable interest rate rose significantly and has now returned to the level of the fixed rate.
According to the latest report of the Luxembourg Central Bank (BCL), the average variable rate granted to households for a property loan jumped to 3.51%, up from 2.58% in December.
-> Property Prices: Housing Observatory sees two scenarios for 2023
As a result, the variable rate has caught up to the fixed rate, which had increased much faster throughout 2022. This trend has slowed in early 2023, with the average fixed rate for a home loan now sitting at 3.58%. However, the report highlights that, due to the BCL’s calculation method, interest rates granted for particularly long periods, e.g., 30 years, can be “significantly higher.”
Meanwhile, the average consumer credit rate fell slightly to 4.03%.
When compared over a one-year period, it becomes apparent just how exceptional the rise in interest rates has been: In January 2022, the variable interest rate was still at 1.3% and the fixed rate at 1.42%.
Combined with equally high housing prices, the interest rate hike is excluding more and more residents from the dream of homeownership.
