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Interest rates
08.03.2023
The Banque centrale du Luxembourg (BCL) informs that, based on preliminary data, the main interest rates applied by Luxembourg’s credit institutions to euro area households and non-financial corporations (NFCs) for their loan and deposit operations have on average evolved as follows in January 2023.
Representative interest rates on new contracts[1] – loans and deposits – concluded with households
The variable[2] interest rate on mortgage loans granted to households has increased by 93 basis points on a monthly basis to reach 3.51% in January 2023 compared to 2.58% in December 2022 and the volume of these newly granted loans has decreased by 67 million euros to reach 217 million euros in January compared to 284 million in December. On a yearly basis, the interest rate has increased by 221 basis points whereas the volume of newly granted loans has decreased by 7 million euros.
The fixed[3] interest rate on mortgage loans granted to households increased by 6 basis points on a monthly basis between December and January to reach 3.58% in January 2023 while the volume of these newly granted loans has decreased by 83 million euros between the two months to reach 219 million euros. On a yearly basis, this interest rate increased by 216 basis points whereas the volume of newly granted loans has decreased by 185 million euros.
On longer maturities, real estate loans with an initial rate fixation period over 10 years increased by 6 basis points to reach 3.60% in January 2023. The monthly volume of these newly granted loans decreased by 59 million on a monthly basis to reach 182 million euros in January 2023. On a yearly basis, this rate increased by 211 basis points while the amount of newly granted loans decreased by 122 million euros. It is important to mention that this fixed rate includes all initial fixation periods above 10 years and is computed based on a sample of banks. The indicated rate is an average rate weighted on the volumes of granted loans. Furthermore, fixed rates with initial fixation periods on loans with very long maturities, like e.g. 30 years, can be significantly higher than this average rate mentioned above.
The interest rate on consumer loans that have an initial fixation period above 1 year and below or equal to 5 years has decreased by 34 basis points on a monthly basis between December and January to reach 4.03% in January 2023. The volume of newly granted loans has increased by 13 million euros to reach 31 million euros in January compared to 18 million in December. On a yearly basis, the interest rate has increased by 228 basis points whereas the volume of new lending has decreased by 8 million euros.
The interest rate on households’ fixed-term deposits that have an initial maturity below or equal to 1 year has reached 180 basis points in January 2023 from 155 basis points in December 2022. On a yearly basis, this rate has increased by 196 basis points.
The following graph provides a detailed overview of the evolution of interest rates over the past two years.
Representative interest rates on new contracts1 – loans and deposits – concluded with NFCs
The variable2 interest rate on loans below or equal to 1 million euros granted to NFCs increased by 34 basis points in January 2023 to 3.43%, compared to 3.09% in December, and the volume has decreased by 309 million euros to reach 508 million in January from 817 million euros in December. On a yearly basis, this interest rate has increased by 206 basis points and the volume of newly granted loans has decreased by 248 million euros.
The variable2 interest rate on loans above 1 million euros granted to NFCs has increased by 1 basis point on a monthly basis to 2.81% during the last reference period, compared to 2.80% in December. The volume of newly granted loans has decreased by 1 106 million euros to reach 3 103 million euros in January compared to 4 209 in December. On a yearly basis, this interest rate has increased by 179 basis points and the volume of newly granted loans has increased by 111 million euros.
The interest rate on fixed-term deposits of NFCs with an initial maturity below or equal to 1 year has increased by 29 basis points on a monthly basis between December and January to reach 1.93% in January 2023. On a yearly basis, this interest rate has increased by 231 basis points.
The tables pertaining to interest rates applied to credit institutions can be consulted and/or downloaded on the BCL’s website on the following pages:
http://www.bcl.lu/en/statistics/series_statistiques_luxembourg/03_Capital_markets/index.html
Weighting method
The interest rates applied to new contracts are weighted within the categories of instruments concerned by the amounts of individual contracts. This results from the compilation of national aggregates carried out by reporting credit institutions and by the BCL.
[1] New contracts refer to any new agreement concluded between the household or the non-financial corporation and the reporting agent. New contracts include all financial contracts which mention for the first time the interest rate pertaining to the deposit or credit and all renegotiations of existing deposits or credits.
[2] Variable interest rate or rate with an initial fixation period inferior or equal to 1 year.
[3] Fixed interest rate weighted by the amounts of contracts for all mortgage loans granted, whatever the initial rate fixation period (above 1 year). This series has been published by the BCL since February 2009 only for methodological reasons linked to the identification of reporting agents.
