Residential mortgages market: signs of stabilisation?
Demand for residential mortgages has dropped in recent years and for a long while mortgage lenders were increasingly reticent to lend. This downward trend now looks to have almost come to a halt. This may be inferred, for one, from the Bank Lending Survey (BLS), a quarterly survey conducted by DNB among eight representative Dutch banks. Having barely decreased in the third quarter of 2010, demand for home loans is expected by banks to stabilise in the final quarter. Judging by this survey, most of the banks interviewed do not seem to plan further tightening of their mortgage credit standards.
The financial crisis had slowed down mortgage market activity in recent years. However, nowadays the number of new mortgage loans with longer-term fixed interest maturities (of more than 5 years) is on the rise. In terms of both the relationship between the rates applying for the different maturities and the rate level (with rates below 5%) also mortgage rates are showing a historically recognisable development.
Dutch external assets on the up
In 2009, the Netherlands saw its net external asset position improve. In the course of that year, the balance of external claims and liabilities rose from EUR 11 billion to just under EUR 100 billion (17 percent of GDP). This largely reflected a (further) 3 percent decline of liabilities to over EUR 2,300 billion. External claims edged up to an ample EUR 2,400 billion. A quarter of this rise was accounted for by a balance of payments current account surplus, while the rest was mainly related to increasing foreign equity and debt paper prices. Dutch foreign investments profited more from rising profits and decreasing uncertainties on the financial markets than investments by non-residents in the Netherlands.
EUR 90 billion in income channelled through Dutch SFIs
Large-scale use is made of Dutch Special Financial Institutions (SFIs) for international financial transactions between foreign group entities. In 2009, such transactions were down (- 12 percent) for the first time in many years. At an average EUR 2,300, however, positions of foreign assets and liabilities remained high, owing, in particular, to direct investments by SFIs, which accounted for no less than three quarters of total foreign direct investments from the Netherlands. In 2009, approximately EUR 90 billion in income was channelled through the Netherlands, with the largest amounts entering the country from Luxembourg (EUR 10 billion) and offshore countries being the chief destination (also EUR 10 billion). In terms of transaction size, especially the United States grew in importance as country of origin and destination. Still a mere 5 percent as recently as in 2005, in 2009 the U.S. share had increased to as much as nearly 30 percent
Structural statistical differences indicative of quality problems
Recently, DNB substantially adjusted the balance of payments figures for 2007-2009. It did so following an improvement project that was successfully completed in 2010. This article provides insight into the background to these revisions, which were necessitated by persistent, so-termed statistical disparities between balance of payments entries and contra-entries (which theoretically ought to be identical). The statistical disparities over the years 2007-2009 were cumulatively reduced by more than EUR 100 billion.
For more information, please contact Tobias Oudejans (tel. 020-5243100, 0652496961) or Herman Lutke Schipholt (020-5242712, 0652496900).