Statistical News Release: Mortgage lending by Dutch banks falls off

Statistical news
Datum 7 mei 2019

At 31 March 2019, Dutch banks’ outstanding mortgage loans totalled EUR 527 billion. On balance, bank mortgage lending receded by EUR 650 million (-0.1%) in March, due in part to the tight housing market in the Netherlands. At 0.1%, year-on-year growth remained slightly positive, levelling off from previous months due to the monthly decline. Growth has also been below historical trend for some time.

Mortgage lending by Dutch banks slowed in March 2019

In March 2014, year-on-year growth in domestic mortgage lending to households by Dutch banks bottomed out at -1.4%. Only in January 2017 did the growth rate return to positive territory. Both demand for and supply of mortgage loans have steadily increased since, on the back of the rebound in the housing market, declining mortgage interest rates and real income gains. Having hovered around 0.4% since December 2017, growth slackened off to 0.1% in March 2019, due in part to the tight housing market. As supply dwindles, rising prices weigh down on affordability. This discourages potential home buyers, particularly first-time buyers, from purchasing a home. In addition, the policy measures aimed at curbing mortgage indebtedness and the low interest rates on savings still encourage home owners to step up their redemption payments and prompt house buyers to put up more of their own money. Last but not least, banks are facing competition from non-bank mortgage lending providers, such as insurance firms, pension funds and investment funds (see also our January 2019 DNBulletin).

Chart 1: Home mortgage lending by Dutch banks (year-on-year growth, %)

Growth remains below historical trend

Amidst a booming Dutch economy, rising house prices and relatively low mortgage interest rates, mortgage lending by Dutch banks has been below the long-term average for some time now. This is illustrated by a new long-term statistical series for outstanding mortgage loans, which we compiled from historical sources and will publish on our statistics website from May 2019 onwards.

Between 1957 and 1980, annual growth of Dutch bank mortgage lending fluctuated between 9% and 27%, averaging 20%. It subsequently stabilised following the second oil shock of 1979 and the economic contraction of 1981 and 1982 at an annual average of 6% until the early nineties, after which it rebounded sharply until the financial crisis erupted in 2007. During and immediately following the crisis, growth levelled off, with year-on-year mortgage lending shrinking for the first time in over 50 years. Due to the policy measures aimed at curbing mortgage indebtedness, the relatively low interest rates on savings and steeper competition from non-bank mortgage lenders, growth in Dutch bank mortgage lending has been subdued over the past few years.

Chart 2: Home mortgage loans in the balance sheets of Dutch banks and affiliated special purpose vehicles (annual growth, %)

We are making efforts to increase the ease of use and added value of our statistics. This is why we publish historical and other statistics that we have adjusted for breaks and make data available on the Dutch government's open data website.

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