Six years after a circular that has been widely talked about, the CSSF may soon set limits on the granting of residential mortgage loans by banks. A measure of prudence almost dictated by the European authorities.
Who says more residents, says more houses and apartments needed. But as the supply of new housing is insufficient, prices per square meter continue to soar as a result of demand. To afford what is still considered an attractive investment (6 or 7% per year), consumers are still borrowing more money from banks.
Many others benefit from still low interest rates to switch from a variable rate to a fixed rate and take cover before the rise in rates.
According to statistics published by the Central Bank of Luxembourg, mortgages to residents reached 28.29 billion euros in February (an increase of 41% in five years and 3.2 times more than 13 years ago – figure retained by the European authorities), with no indication from this amount concerning immovable property situated in Luxembourg.
A majority of credits over 20 to 30 years
One third of these contracts were subscribed for 25 to 30 years, 22% for 20 to 25 years and 15% for 15 to 20 years.
The duration of loans is lengthening, it will be necessary to wait to be able to affirm it: the statistical methods changed in 2014 and offer more finesse.
In February, there was for example 54 million euros of credit with a duration of more than 40 years (against 42 million four years ago). Seen in terms of new loans granted in 2017, the market remains driven by the acquisition of single-family homes (3.6 billion, down from 2016) but housing in a collective building pass a new annual course (2 billion).
The seven banks that provide 99% of domestic mortgages have strong enough strength, say European banking supervisors. According to her, these credits represent only 1% of their assets. In other words, even a serious economic problem that would result in cascading defaults would have a limited impact.
Other experts evoke not a «real estate bubble» but a structural phenomenon.
Five maximum limits set by the CSSF
But for households, the situation is deteriorating. According to the conclusions of the «European Semester» at the beginning of March, a kind of bulletin board that the European Commission delivers to each of the Member States, «in terms of disposable income, household debt rose from 39% of GDP in 2000 to 62% of GDP. % in 2016 «. 80% of this debt results from mortgages.