COVID-19 and the Mortgage Market in Luxembourg

Francois Koulischer, Pauline Perray and Thi Thu Huyen Tran
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Pauline Perray: Institut National de la Statistique et des Études Économiques du Grand-Duché de Luxembourg (STATEC), L-1468 Luxembourg, Luxembourg
Thi Thu Huyen Tran: Institut National de la Statistique et des Études Économiques du Grand-Duché de Luxembourg (STATEC), L-1468 Luxembourg, Luxembourg

JRFM, 2022, vol. 15, issue 3, 1-24

Abstract: With a ratio of household debt to gross disposable income above 150%, households in Luxembourg are among the most indebted in Europe. A high level of debt exacerbates the sensitivity of household net worth to changes in house prices, which can increase the severity of economic downturns. In this note, we evaluate the implications of the COVID-19 crisis for the mortgage market in Luxembourg using data on the labour market and government interventions, as well as surveys of consumer finances (HFCS). Our conclusions are twofold. At the aggregate level, the Luxembourg mortgage market is relatively well placed to weather the shock, because a large share of residents work in sectors that are less affected by the crisis such as the financial or government sectors. However, our analysis of micro-level survey data suggests that some segments of the population may be financially vulnerable to the COVID-19 shock.

Keywords: COVID-19; household finance; real estate market; mortgage market (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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