1.8%, 1.9% or even 2% on a 30 year fixed rate... Luxembourg borrowers are facing a surge in mortgage rates. But what impact will this have on your project? We explain and detail the measures taken by Luxembourg banks to maintain the feasibility of your project.

Why are interest rates rising sharply in Europe and Luxembourg?

Inflation is the main culprit the rise in property loan rates. Indeed, since December 2021, 10-year bond yields have risen by almost 0.4 points. This trend is the result of decisions taken by the US central bank (the FED) to control inflation.

The latter provides for a wave of 3 increases in its key rateOne of these has already taken place at the beginning of January. This decision is not without repercussions for individuals, including Europeans, who are already seeing an increase in their interest rates.

Is my project still feasible?

If you carried out a borrowing capacity simulation a few months ago, this may no longer be valid. 

Indeed, after a year 2021 punctuated by new measures increasing the thresholds of contribution necessary to borrow, you risk being now faced with rising rates.

Average borrowing rates have risen from 1.4% to 1.8% or even 2% (over 30 years, for a fixed rate).

The risk of this increase? That fewer Luxembourg residents will be able to access property.

The consequence is to see monthly payments increase, which will limit borrowing capacity. For a 30-year fixed-rate loan of €800,000, you will have to pay an extra €155 each month to repay your loan.

Fortunately, there are still ways to get a home loan at an attractive rate:

• Consult several banks : Some banks are less exposed to market fluctuations due to different refinancing. This limits the impact on the rates they offer to future buyers.
• Playing on the structure of its funding: There are still attractive rate combinations for Luxembourg individuals. You just have to find the best combination to secure your loan with your financial advisor.

To find out about all the financing solutions available for your project, the mortgage broker is your best ally. It will will advise and do everything possible to acquire your property.

The trick: simulate your borrowing capacity every two months to ensure that your project is still feasible.

The Finance Check: the free certificate certifying the simulation of borrowing capacity

In order to ensure that your property project is still feasible, atHomeFinance offers the "Finance Check". This free certificate establishes every 2 months the borrowing capacity of future buyers. It thus allows them to reassure over-solicited sellers, in order to buy more quickly in Luxembourg.