Banks in Luxembourg issued significantly more mortgage loans in the second trimester of 2025, up 33% compared to the same period last year, according to figures released by the National Institute of Statistics and Economic Studies (STATEC) on Tuesday.

Lending also rose sharply compared to the first trimester of this year, with an increase of 30%. STATEC attributes the rebound to lower interest rates, more flexible lending conditions, and government support measures.

Variable-rate loans, in particular, have become more attractive, rising by nearly 50% between the first and second trimesters, while fixed-rate loans were up by 25%. In June, variable-rate mortgages accounted for 44% of new loans, compared to just 34% at the end of 2024.

Since May, the average variable interest rate has dipped slightly below the fixed rate and is expected to continue falling. Fixed rates, on the other hand, are forecast to stabilise at around 3.4%.

Despite the strong rebound, banks anticipate a slowdown in demand for mortgage loans in the third trimester.