Until this year it was available at all banks: a mortgage loan with an interest rate of less than one percent. Since the beginning of this year, however, interest rates have risen sharply and, according to De Nederlandsche Bank (DNB), this has consequences for the customer’s strategy. Dutch people who now take out a mortgage do so much more often with a variable interest rate or with a fixed-interest period of up to one year. After all, when interest rates are low, it is less obvious for many people to opt for a variable interest rate.
In September, more than 1 billion euros worth of mortgages were taken out with a variable interest rate or an interest rate with a maximum term of one year. That is almost half more than in January. Compared to August, the loan amount was 7 percent higher in September.
Interest rates have risen rapidly this year. This applies to the mortgage interest rate, but also to the rates of the (shorter) interest rates that the central banks can influence. The European Central Bank (ECB) raised interest rates this year mainly to curb inflation. In July, interest rates were raised for the first time, which, according to the ECB, had not happened in eleven years.
Those who now want to fix their mortgage interest for ten years will soon find themselves at a rate of more than 4.5 percent. Figures from DNB show that detention for ten years was 21 percent less common in September than a month earlier.
Figures from DNB show that incarceration for ten years was 21 percent less common in September than a month earlier
Partly due to the higher interest rate, the total amount of mortgages fell by 16 percent. In January, 6.8 billion euros were closed, in September it was still 5.7 billion. Compared to September 2021, the decrease was 12 percent.
Loans with a fixed-interest period of longer than ten years in particular became less popular in the course of this year. The amount of mortgages granted in this interest rate category fell from EUR 4.0 billion in January to just EUR 2.4 billion in September.
De Nederlandsche Bank links the choice of the term of the interest directly to the interest rate development.
Higher interest rates, combined with inflation and the war in Ukraine, are also causing house prices to fall. Naturally, this also has an effect on the size of the mortgage amounts. Selling prices in the third quarter of this year were 5.8 percent lower than in the previous three months. That is the largest decrease that has ever been measured, according to the NVM brokers’ association. The average sales price of an existing owner-occupied home is now 425,000 euros.
A version of this article also appeared in the newspaper of November 25, 2022