Mortgage & Lending in Luxembourg

What Changed

Introduces precise definitions for CRR Article 126a(2) terms, enabling 100% risk weight (instead of 150%) for ADC exposures to residential property if conditions are met: at least 50% of total contracts as pre-sale/pre-lease agreements with substantial cash deposits (e.g., ≥10% of sale price for sales, ≥3x monthly lease for leases), or equivalent financing/sale-lease combos; plus obligor equity ≥25% of completed property value. Mandates "sound standards for lending and credit monitoring" alongsi

What You Need To Do

• Review and classify ADC exposures against EBA-defined criteria (e
• Update internal policies, risk assessment models, and credit approval processes to incorporate "sound lending standards" and EBA specifications, including social housing carve-outs
• Recalculate capital requirements under standardized credit risk approach; report changes via CRR disclosures
• Maintain documentation proving compliance (e
• Institutions must "make every effort to comply" per EBA Regulation Article 16(3)

Key Dates

References

• [1] banking.vision
• [2] finanssivalvonta.fi
• [3] regulationtomorrow.com
• [4] cssf.lu
• [5] jdsupra.com
• [6] cssf.lu
• [7] cssf.lu
• [8] eba.europa.eu