The housing market in Luxembourg appears poised for sustained recovery in 2025, with STATEC data showing mortgage lending to private buyers surged in late 2024 amid steadily declining interest rates.

Luxembourg's mortgage market is showing signs of recovery, with a "clear increase" in lending activity following months of declining interest rates, according to the latest STATEC economic report published Thursday.

The upturn, which began in spring 2024, accelerated sharply in the fourth quarter, driven primarily by loans to private homebuyers. In contrast, developers continue to face what STATEC describes as a "prolonged slump" in financing demand.

Banks report rising mortgage applications as buyer confidence returns. The trend aligns with steadily falling rates since late 2023, with the Luxembourg Central Bank (BCL) projecting variable rates below 4% and fixed rates under 3.4% for early 2025 – making purchases more accessible for households that had postponed buying plans.

"Homebuying intentions have risen consistently since mid-2024 and will likely strengthen through 2025," STATEC noted. The recovery has been bolstered by stable government housing subsidies and a year-end price increase recorded by the Housing Observatory, signalling renewed activity across the property market.