Demand for home loans has grown year-on-year for the first time since May 2022.

The demand for home loans in Luxembourg in April 2024 surged to €488m, marking an increase of €55m or 12.7% from the previous month. This translates to an 11.4% increase year-on-year, according to data from the Luxembourg Central Bank (BCL), suggesting potential green shoots in the housing market.

However, rates showed only a minor decrease of three basis points, with variable mortgage rates with an initial fixation of one year holding steady at 4.84% compared to March’s 4.87%.

It is also interesting to note that out of the total €488m in housing loans, over 45%, amounting to €244m, had an interest rate lock-in period exceeding 10 years, maintaining a rate of 3.64%, identical to the previous month.

This indicates that the majority of the new loan volume in April might not solely be attributed to favourable interest rates. Moreover, it seems that buyers were not convinced that a potential 25bps decrease in key banking rates in the euro area as early as June would quickly translate to lower mortgage rates either. Instead, it’s plausible that potential buyers found current prices attractive or perceived other benefits, such as favourable tax deductions.

The analysis of loan volumes and interest rates is based on data from 73 participating banks.