If we analyze the evolution of the Luxembourgish real estate market in recent years, we see that many components demonstrate the value of investing in real estate. Firstly, it is due to the stability of the real estate market in the Grand Duchy, which has not been affected even during times of crisis but continued to grow. Getting a remuneration from savings which no longer covers the inflation against rental incomes that offer higher returns above 4%, and not to forget the tax benefits for investors, the objective of building assets and additional income in order to have a comfortable retirement, the concern of accumulating wealth for children; these are some of the many arguments in favor of investing in real estate. A demand for housing that exceeds the current supply in the real estate market should guarantee some stability. This housing shortage, which is associated with the recent VAT increase for investors, and which if we recall, has increased from 3% to 17%, has an impact on rents that are constantly increasing.

In the current context, even though it is difficult to decide the evolution of interest rates, we noted that some financial institutions have been extra cautious when granting credit. Indeed, a directive of the Commission de Surveillance du Secteur Financier recommends them to have a capital requirement of around 20% of the project value and it also recommends the banker to do a "stress test" in order to simulate the customer's financial situation in case there is an increase in rates. These elements have undoubtedly hindered home ownership during the last 2 years.

In order to mitigate a possible rate hike and to freeze the burden of housing loans, certain financial institutions provide promising solutions which help them to protect themselves against a possible increase. Alongside traditional fixed-rates, some institutes offer a revisable fixed rate, which is a very interesting solution that guarantees a fixed rate for a period previously agreed upon and thus to prevent themselves from having any bad surprise.