The Luxembourg Central Bank reports that mortgage rates slightly fell for variable loans and rose for fixed ones in March, offering some relief to borrowers amid high property prices and limited purchasing power.

Buying property continues to be one of the main concerns for people living in Luxembourg, driven by persistently high housing prices and limited purchasing power due to elevated interest rates.

On Thursday 8 May, the Luxembourg Central Bank (BCL) released its latest estimates on the interest rates currently applied by banks in the country.

According to the BCL, Luxembourg residents who took out a new mortgage in March benefited from slightly lower variable interest rates than the previous month: 3.76% in March compared to 3.84% in February. At the end of 2023, the variable mortgage rate had reached 5% – a record high in recent years.

This drop offers some relief to borrowers. For instance, a €700,000 mortgage over 25 years would have cost €4,092 per month at a 5% rate, but the monthly repayment falls to €3,603 with a variable rate of 3.76%.

Fixed rates for mortgages with terms over 10 years, however, rose slightly to 3.47% in March, up from 3.31% in February. Still, this increase does not reverse the downward trend that began in late 2023, when fixed rates were around 4.16%. At the current rate, a €700,000 mortgage over 25 years would result in fixed monthly repayments of approximately €3,493.

The BCL also noted that consumer loan rates have remained stable at 3.99%.

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