Mortgage & Lending in Luxembourg

Key dates

17 December 2018

- Original issuance of Circular CSSF 18/703 introducing semi-annual reporting

25 March 2026

- Publication date of Circular CSSF 26/908 (today)

Suggested considerations

• Download and review the full Circular CSSF 26/908 (291.96Kb PDF) and the updated consolidated Circular CSSF 18/703 (258.91Kb PDF) from the CSSF website: https://www.cssf.lu/en/Document/circular-cssf-26-908/.
• Conduct a gap analysis of current reporting processes against the amended requirements for borrower-related residential real estate indicators.
• Update internal systems, data collection templates, and reporting workflows to ensure accurate semi-annual submissions to the CSSF.
• Train relevant compliance, risk, and finance teams on changes; document compliance confirmations for audit trails.

What changed

The circular introduces amendments to the original Circular CSSF 18/703 (itself amended by Circulars CSSF 20/737 and 21/772), focusing on semi-annual reporting of indicators tied to borrowers in residential real estate. Specific changes are not detailed in the provided summary or full content excerpt, but they likely involve refinements to reporting templates, data granularity, or submission processes to align with evolving EU prudential standards on real estate risk monitoring. The updated consolidated version of Circular CSSF 18/703 is now available as a 258.91Kb PDF.

Key dates

December 3, 2020

- CSSF Regulation No 20-08 originally published

January 1, 2021

- Regulation and LTV limits became effective for residential real estate credit on Luxembourg territory

May 21, 2024

- CSSF Regulation No 24-04 introduced temporary adjustments to LTV limits

December 30, 2024

- CSSF Regulation No 24-10 extended temporary adjustments

January 7, 2025

- Most recent Technical FAQ version published (prior to March 9, 2026 update)

Suggested considerations

• *For all lenders:
• *Verify LTV compliance calculations for all new residential mortgage originations using the framework specified in the FAQ, ensuring own funds are calculated as actual equity contributions from borrowers
• *Implement dual LTV tracking for borrowers financing new property through sale of existing property, ensuring compliance with both interim and final LTV ratios
• *Document own funds sources carefully, particularly when cash collateral or sale proceeds are used, as these are only permitted for loans with initial LTV below 100%
• *Prepare for June 30, 2025 transition by:

What changed

• The most recent update (March 9, 2026) to the Technical FAQ reflects the regulatory framework established by CSSF Regulation No 20-08 (as modified by Regulation No 24-10).
• First-time buyers: LTV limit of up to 100%
• Other buyers: LTV limit of 90%, implemented via portfolio allowance Buy-to-Let Residential Loans:
• Standard LTV limit of 80%
• Temporary exemption (until June 30, 2025): Lenders may apply LTV ratios up to 95% for up to 10% of annual production Other Residential Real Estate Loans:

Key dates

17 Dec 2018

Original Circular CSSF 18/703 published; reporting obligation introduced

19 Feb 2020

Circular CSSF 20/737 and FAQ published; clarified exemptions and scope

10 May 2021

Circular CSSF 21/772 amendment published

25 Mar 2026

Circular CSSF 26/908 amendment published (today's date); immediate implementation expected for upcoming cycles

Ongoing (semi Deadline

annual); Reports due in April (ref. 31 Dec) and October (ref. 30 Jun) each year

Suggested considerations

• Download and use the dedicated RRE data template from the CSSF website (https://www.cssf.lu/en/Document/circular-cssf-18-703/).
• Assess total outstanding RRE exposure; if > EUR 10 million, collect data on new/outstanding exposures per reference dates (30 Jun/31 Dec).
• Ensure IT systems store/process RRE indicators (e.g., borrower debt metrics, collateral details) for semi-annual extraction.
• Submit reports to CSSF in April/October; review amendments (20/737, 21/772, 26/908) and FAQ for updates.
• For exempt banks: Confirm eligibility annually; no zero report required.

What changed

• - Original Scope (CSSF 18/703, 17 Dec 2018): Requires semi-annual reporting of RRE indicators for loans secured by Luxembourg residential real estate (existing dwellings, under construction,...
• Amendment CSSF 20/737 (19 Feb 2020): Clarified reporting thresholds and processes; banks with total outstanding RRE exposure ≤ EUR 10 million are exempt from reporting (no zero report needed if no...
• FAQ (19 Feb 2020): Specifies reporting for new exposures (Jan-Jun or Jul-Dec) and outstanding exposures as of 30 June/31 Dec; exemption applies only if exposure < EUR 10 million.
• Amendment CSSF 21/772 (10 May 2021): Further refinements to data template and indicators.
• Amendment CSSF 26/908 (25 Mar 2026): Latest update to reporting template and processes, effective immediately given publication date. Data is collected via a CSSF template on the website, focusing on...

Key dates

4 November 2025

- EBA Guidelines (EBA/GL/2025/03) apply across EU (two months post-publication on 27 June 2025 in all official languages)

1 December 2025 Deadline

- CSSF Circular 25/899 published, requiring immediate compliance preparation for Luxembourg firms

Suggested considerations

• Review and classify ADC exposures against EBA-defined criteria (e.g., contract thresholds, equity levels, monitoring standards) to determine eligibility for 100% risk weight.
• 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.g., deposit proofs, equity valuations) for supervisory audits by CSSF.
• Institutions must "make every effort to comply" per EBA Regulation Article 16(3).

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...
• Mandates "sound standards for lending and credit monitoring" alongside these criteria.
• Accounts for social housing/public not-for-profit lending specificities, with tailored rules for regulated entities serving long-term tenant housing.
• Replaces prior "particularly high-risk exposure" class with dedicated ADC class under CRR3.