Economy & Politics

Real estate credit is not suffering from the crisis

Individuals and developers continue to take out loans to finalize housing purchase or construction operations. In October alone, $ 835 million was awarded.

Patrick JACQUEMOT

Patrick JACQUEMOT

Individuals and developers continue to take out loans to finalize housing purchase or construction operations. In October alone, $ 835 million was awarded.

What if, on the mortgage side, 2020 wasn’t a cursed year? The scenario is thus looming in view of the latest publication from the Banque centrale du Luxembourg: the banks again responded to a number of loan requests in October. Almost as much, in volume, as in 2019. After 2019 a record year (with € 11.17 billion in mortgage loans granted in the Grand Duchy), the current year is approaching these amounts. Thus, for only the first three quarters, already 8.7 billion euros in mortgage loans have been accepted. That is as much as for the whole of 2017, for comparison.


TC, Wohnungsbau, Housing. Yesterday: Kirchberg. Photo: Gerry Huberty / Luxemburger Wort

While spirits remain on the development of the pandemic, voters polled for the November 2020 Politmonitor have other realities in mind. Those related to real estate, traffic jams or the future prospects of future generations.


And October 2020, the last month studied by the BCL, is no exception to this ‘good health’. With, excuse the little, 289 million granted at variable rate to households against 546 million at fixed rate. That is 866 million in four weeks. This bodes well for the construction sector, which will benefit from this windfall in the months to come.

Regarding interest rates, in both categories, they fell slightly in October. They stand at 1.27% on fixed-rate loans, and 1.35% for the variable rate.

Part of the attractiveness of banking on this type of credit is undoubtedly due to the entry into force, as of January 1, of a new recommendation. More restrictive.

Thus, the banks were invited to review the tunable ceiling to their clients with regard to home loans. There is no longer any question of conceding too much to individuals, and new barriers have been raised depending on the nature of the investor. The danger is to see many of its debtors no longer able to honor their debts, and endanger the banking system.


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