The latest figures from the Central Bank of Luxembourg reveal that interest rates on property loans have shown little sign of improvement for prospective buyers. According to data released this week, the terms negotiated between homebuyers and banks in May are broadly in line with those seen in recent months, maintaining a challenging environment for those seeking to finance a home purchase.
Fixed interest rates for property loans continue to rise. For loans with a fixed term of at least 10 years, the average negotiated rate in May climbed to 3.88% – the highest level recorded since December 2023.
While the increase has been gradual, it has remained consistent since December 2024, when fixed rates were around 3.25%. As a practical example, a €700,000 mortgage over 25 years now equates to monthly repayments of €3,649, making homeownership increasingly costly for many households.
Unlike fixed rates, variable mortgage rates in Luxembourg have failed to break through a stubborn ceiling. In May, the average variable rate negotiated with Luxembourg banks stood at 3.10%. For borrowers, this rate translates to monthly repayments of approximately €3,356 on a €700,000 loan taken out over 25 years. Despite hopes for a downward shift, variable rates have shown little movement in recent months, offering limited respite for buyers considering this option.
The trend of rising rates is not limited to mortgages. Consumer credit has also continued its rebound, pushing past the 5% mark. In May, the average rate reached 5.04%, its highest point since the end of 2023, further increasing borrowing costs for households.
