Banks grant fewer new mortgage loans

Statistical News Release
Date 25 October 2012

Banks in the Netherlands grant fewer new mortgage loans. In September, banks had 1.8 per cent more mortgage loans outstanding than in the previous year. This is the lowest growth since the start of this statistic, in 2003. Mortgage rates also decreased further. The average interest rate on mortgages contracted in August was 4.2 per cent, against 4.6 per cent a year earlier.

Fewer new mortgage loans

Banks in the Netherlands grant fewer new mortgages to households. For some time now, not only has demand for new mortgages among households declined, but the credit standards for new bank loans have been tightened as well. According to the banks, both the reduced demand and the tightened credit standards are the result of the general economic development and the situation in the housing market. The lagging growth in mortgage lending has been going on for a considerable period now, although the growth rate is still positive. In 2009, growth of new mortgages dwindled, subsequently stabilising in 2010 and the first half of 2011. But just over a year ago growth retardation continued again. In September, the growth of mortgage lending reached the lowest level since the start of the statistic. In that month, banks had 1.8 per cent more mortgage loans outstanding than a year earlier. In the past three months, banks' mortgage portfolios grew by net EUR 10 billion (Chart 1). In the first half of 2008, twelve-month growth was still EUR 30 billion.

Net annual growth of banks' mortgage portfolios

Falling mortgage rates

Not only does the growth of new lending decrease. The mortgage rates agreed by banks and households are also declining steadily. Since the beginning of 2012, the mortgage rate has been falling. In August, households took out mortgage loans with banks at an average rate of 4.2 per cent (Chart 2). This is almost half a percentage point less than a year earlier. In particular mortgages with a short fixed interest period of up to five years became cheaper, also by approximately half a percentage point over a twelve-month period.

Mortgage rate