Mortgage rates in Luxembourg have stopped falling

According to the latest report from the Central Bank of Luxembourg (BCL), prospective homebuyers’ hopes for an easing of lending conditions have not been realised. Data for February show that the downward trend in mortgage rates has come to a halt, and the cost of borrowing for residents of the Grand Duchy remains prohibitively high.

The variable rate, which is one of the most popular in the country, rose slightly in February, climbing to 3.07% from 3.01% in January. This rate has effectively remained unchanged since August 2025. To illustrate: for a 25-year loan of €700,000, the monthly repayment for a family would be approximately €3,345.

The situation regarding fixed rates looks even less optimistic, indicating that banks are unwilling to be flexible in the current economic climate. The average rate on long-term loans (over 10 years) rose to 3.85% in February, whereas a month earlier it stood at 3.77%, and in February last year at 3.31%. Under this scenario, servicing a similar debt of €700,000 would cost the borrower €3,637 per month.

The only positive sign in the regulator’s report was the consumer credit sector. Here, rates fell to 4.05%, reaching their lowest level in the past year. Nevertheless, this is little consolation for the property market: the high cost of long-term financing continues to block access to home ownership for a significant proportion of the population, keeping demand at historically low levels.