LUXEMBOURG - On Friday, the Banque centrale du Luxembourg published an overview of interest rate trends in June. While variable rates rose slightly, fixed rates fell slightly.
Fixed interest rates for mortgages fell by 0.6 points between May and June, to stand at 3.79% in June, according to data published this Friday by the Luxembourg central bank (BCL). New loans to households therefore rose by 10 million euros month-on-month to 286 million euros.
Fixed interest rates for loans of more than ten years even fell by 0.07 points, from 3.8% to 3.73%. In year-on-year terms, however, the situation is less encouraging: In June 2023, fixed interest rates were 1.53 percentage points higher than in June 2022, while total loans granted were 96 million lower than the previous year.
Consumer loans with terms of one to five years fell by 0.04 percentage points between May and June to 4.81%, while year-on-year they rose by 1.86 percentage points.
The property market in turmoil
Variable interest rates, on the other hand, rose - albeit more slowly than in previous months - by 0.4 percentage points to 4.42 per cent in June. In May, they were thus at 4.38 per cent. The total of newly granted loans with variable interest rates recovered somewhat and, at 221 million euros, was five million euros higher in June than in May. With a plus of 3.08 percentage points, the variable interest rates exploded year-on-year and caused new loans to drop by 116 million euros.
Interest rates on real estate loans have been watched with a wary eye for months, as they are significantly involved in Luxembourg's battered real estate market, which in turn is weighing heavily on the construction industry. This is a logical consequence, as the developments on the interest rate market have prevented many households from buying their own homes.
source: Jérôme Wiss L'essentiel 18.8.2023