ECB refinancing rates

The European Central Bank (ECB) refinancing rate is the rate that banks have to pay when they borrow money from the ECB. The interest rates on real estate loans react to this interest rate. As a rule, a change in this interest rate also entails a change in the interest on real estate loans.

After the interest rate remained unchanged at 0.0% for more than 6 years since March 10, 2016, it was increased twice in 2022 by 0.5% and twice by 0.75%, reaching 2.5% at the end of the year. In February 2023 the ECB increased the rate by 0,5%. Since February 8, 2023, the refinancing rate of the ECB is 3.0%. The interest rates on real estate loans react with a time lag to a change in the refinancing interest rate. As a rule, a change in this interest rate also results in a change in interest rates for real estate loans. Most banks in Luxembourg have not yet applied the latest changes in the refinancing interest rate to the interest on their real estate loans. It can therefore be assumed that interest rates on real estate loans will continue to rise in the coming months.