The number of mortgages in Luxembourg fell by 40%

Luxembourg is in a rather interesting situation, with positive GDP growth forecasts for both this year and next, but stable inflation and labor market issues. Construction has become one of the most problematic sectors of the economy, and rising BCE interest rates have only added to the challenges of an already suffering sector.

The interest rates on outstanding mortgages in Luxembourg have risen by almost 3% over the year: from 1.5% in February 2022 to 4.2% in September 2023. On the other hand, the number of loans granted has fallen by 40%, which does not help the construction sector.

It is hard to say whether the situation will improve in 2024. The BCE is keeping interest rates high, but is not yet talking about further hikes. If the Luxembourg economy manages to stabilize and inflation slows down, this could have a positive impact on the housing industry.