Nearly a third of Luxembourgers sleep well at night knowing their mortgage is paid in full

A third of Luxembourg homeowners do not have a mortgage despite sky-high property prices in the country, the finance and housing ministers said on Wednesday.

A total of 33% of people who owned a house or a flat in 2018 were mortgage-free, another 33% payed a mortgage, 25% were tenants and the remainder were in social housing, Pierre Gramegna and Henri Kox said in response to a parliamentary question.

The figures come from a study carried out by Luxembourg’s housing research body, Observatoire de l’Habitat, and are the latest to date. People without a mortgage spend just €362 a month on average on charges related to housing, while those repaying a mortgage fork out close to €2,000, the study shows.

While a third lives mortgage-free, those who do have a loan on their property are spending, on average, more than a third of their disposable income on their mortgage, Luxembourg’s financial watchdog, the CSSF, said earlier this month.

“It appears that on average around 39% of the annual disposable income is dedicated to debt repayment”, Luxembourg Times notes.

People were taking out mortgages to cover nearly 78% of their property’s price in the first semester of 2020 – an increase of more than 4 percentage points in one year, the CSSF said. A third of all new loans taken out during that period reached above 90%, the report noted based on surveys.