The base rates of banks in Luxembourg will rise on 1 April, some by more than 5%.

People who have a variable-rate loan will feel the impact of this change in their monthly payment. Because of the recent hikes, the difference can be significant for some clients, as evidenced by various cases sent to our colleagues at by readers.

A specific example

A reader told RTL that in the summer of 2022, he had a variable interest rate of 1.65%. According to a letter from the bank, this rate will jump to 5.05% from 1 April.

A year ago, he would have paid back about €1,600 per month. He now has to pay €2,100 each month, despite having paid off €30,000 of the loan outright, leaving him with a remaining debt of almost €300,000.

The higher the loan, the higher the increase

When asked, members of the banking sector explained that various people owed more than €1 million on their property. If the entire amount was borrowed at a variable interest rate, they are now at risk of facing increases of over €2,000. Switching to a fixed interest rate now would not be a long-term alternative because the fixed rate is currently at a similar level to the variable rate. In the short term, however, it could be an option. According to one expert, the fixed interest rate is sometimes more appealing than the variable interest rate in the short term. The banks would not have much leeway in this situation; an alternative would be to extend the term, but that would not be a miracle solution either.

Clients with bridge loans will not have it easy

In particular, clients who have taken out a bridge loan, for example to cover the period between moving from a flat to a newly built house, will face difficulties. According to a banker who has served private clients for years, these clients only pay the interest on the loan during the transitional period, which is a maximum of two years. In one specific situation, he recently talked to a couple who had previously paid roughly €13,000 per year - now they would be at nearly €33,000.

Several of the experts who were contacted by our colleagues from assume that over the next few months, a considerable number of people will struggle to repay their loans, and in the worst-case scenario, they will have to sell their flat or house again.

None of the people mentioned in this article wanted to be quoted by name because they all work for major banks.