Credit boom in Luxembourg: Falling interest rates stimulate the real estate market!

Credit boom in Luxembourg: Falling interest rates stimulate the real estate market!

Luxembourg is currently experiencing a notable increase in property purchases, driven by falling interest rates on property loans. According to a report by Lesseniel The variable interest rate for real estate loans fell by 18 basis points in May 2025, from 3.50% to 3.32%. This rate cut contributed significantly to the increase in lending, which rose by €73 million from €179 million to €252 million in a month.

Compared to the previous year, a reduction in interest rates of 1.49 percentage points was observed, which led to an increase in the loan amount granted by 92 million euros. The differences in interest rates depending on the term of the loans are particularly noticeable. Loans with a term of 1 to 5 years saw a decrease of 7 basis points to 3.20%, while interest rates for terms of 5 to 10 years increased by 5 basis points to 3.48%. On the other hand, interest rates rose for terms of over 15 years, which shows a clear trend: longer terms are associated with higher costs.

Detailed interest rates for real estate loans

The current situation for the different terms of real estate loans is as follows:

• 1 bis 5 Jahre: 3,20%, Kreditvolumen 44 Millionen Euro
• 5 bis 10 Jahre: 3,48%, Kreditvolumen 52 Millionen Euro
• 10 bis 15 Jahre: 3,67%
• 15 bis 20 Jahre: Anstieg, Zinssatz nicht genau angegeben
• Über 25 Jahre: 3,66%

Additionally, consumer loans saw their interest rate increase by 18 basis points in May 2025, from 4.63% to 4.81%. This brought an increase in the amount lent to 27 million euros, an increase of 1 million euros compared to April. Year-on-year, the interest rate for consumer loans rose only minimally by one basis point.

Current interest rate developments and trends

According to the interest rates published by the Banque Centrale du Luxembourg on June 6, 2025, a differentiated trend appears. Variable interest rates for loans with an initial interest rate fixation of up to one year recorded a decline of 0.26 percentage points to 3.50%. For terms between more than one year and five years, interest rates remained stable at 3.27%. However, in the middle range, i.e. for terms of more than five to ten years, interest rates rose to 3.43%, while for fifteen to twenty year terms they fell by 0.11 points to 3.05%.

The interest rate situation therefore remains attractive for medium to long-term planning, even if possible higher interest rates at banks may arise due to the strong upward trend in real estate financing. Pret Realty points out that interest rates reflect the market situation and the figures are lagged at least a month.