Statistics Netherlands reported on Tuesday that only 6% of households have a mortgage that is higher than the value of the home. These are figures from the beginning of 2020, after which house prices rose much further. Eight years ago, at the height of the housing crisis, approximately 1.5 million homes were under water. That was more than a third of the number of owner-occupied homes.
Increase
Frank Notten of CBS apologizes for the somewhat dated figures. “We just picked up this topic again. We will publish figures for 2021 in the autumn.” The CBS says that the decline in the number of houses that are under water is mainly due to the explosive rise in house prices and the introduction in 2013 of the obligation to repay if you want to be entitled to mortgage interest deduction.
Notten thinks the percentage of 6% underwater is still surprisingly high, also because since 2018 home buyers are only allowed to borrow a maximum of 100% of the home value. “It may be because people are allowed to borrow more than the home value to make their home more sustainable. It can also be because people borrow extra from family.”
In 2020, 86% of homeowners under the age of 45 had a home with equity. Among the over-65s, 60% had equity and 39% had no mortgage debt at all.
annual income
The Dutch mortgage risk has also declined sharply in another respect. The CBS observes a sharp decline in the ratio of mortgage debt to income. In 2011, the average mortgage debt was 3.7 as large as the annual income. By 2020, that had dropped to 3.1. “Especially among young people and lower income groups, this risk has been reduced, possibly due to stricter mortgage requirements. Among the older age groups, the ratio of mortgage debt to disposable income has increased slightly,” the statistical office said in its report on Wednesday.
Since 2020, house prices have increased by a further 34% to date. Total Dutch mortgage debt rose much less rapidly, by 5% to €775 billion in the middle of last year. A further decline in the number of households under water therefore seems likely. Recent buyers, however, are faced with a 2% drop in value, the NVM estate agent’s club recently reported.
National mortgage debt has risen just 13% since 2014, while housing stock has grown and house prices have nearly doubled.
intervene
At the end of last year, the European Commission asked for further intervention in the mortgage interest deduction in exchange for corona support, because of fears for Dutch mortgage debts. President Klaas Knot of De Nederlandsche Bank also continues to advocate tackling the interest deduction to prevent the Dutch mortgage debt from getting out of hand.