More packaged loans from buy-to-let mortgages

Securitisation involves bundling loans extended to households and businesses, which are then packaged and sold as bonds through dedicated securitisation firms. This frees up funds for banks and other lenders so they can provide new loans.

Increased securitisation of buy-to-let mortgages

The securitisation of buy-to-let mortgages started in the Netherlands in 2017 (EUR 0.8 billion) and 2018 (EUR 0.4 billion).

Due to the increases in 2020, total securitisation of buy-to-let mortgages has more than doubled, to EUR 3.3 billion. This reflects the growth of the private rentals market, and the interest of international institutional investors in the Dutch housing market.

The securitised buy-to-let mortgage loans are originated by five mortgage loan providers. Several of these entered the mortgage lending market in 2020. The smaller providers work mainly with foreign banks, which also extend the financing prior to securitisation.

Total securitisation market contracts further

In total, securitisations amounting to EUR 5.9 billion were sold to external investors in 2020 via Dutch entities created specifically for that purpose. This was EUR 0.5 billion (-7.6%) less than in 2019 (Chart 1). It is also the lowest volume observed since the 2010 revival of the securitisations market in the wake of the financial crisis.

The issuance volume was also lower than the maturity of existing securitisations, further reducing the amount outstanding placed with external investors. The volume of Dutch securitisations fell by EUR 3.1 billion (-7.2%) to EUR 40.6 billion in 2020 (see Chart 2).

As a result, the securitisation market in the Netherlands in terms of outstanding amount has returned to 2001 levels, when it consisted largely of relatively simple securitisations.

This long-term downward trend is linked, among other things, to the ease with which mortgage lenders and other financial institutions can obtain funds, such as through the ECB's lending facilities and the issuance of covered bonds. Banks issue covered bonds using mostly residential mortgage loans as collateral, and these can be a potential alternative to securitisations. Since 2015, the amount of outstanding covered bonds has been higher than securitisations and at the end of 2020 amounted to EUR 85.7 billion.

Since 2014 so-termed regiepartijen have also entered the mortgage market. These are funds that originate mortgage loans on behalf of institutional investors. As a result, pension funds and insurers have invested more directly in mortgages.

Further information

•  Link to table