Dutch central bank warns on mortgages

2nd November 2011, Comments 0 comments

The Dutch government has been told to tighten up as soon as possible the generous tax relief available on mortgage interest payments.

Klaas Knot, the president of the Dutch central bank DNB says the enormous mortgage debt owed by Dutch households constitutes a major risk to the financial system.

The generous tax breaks encourage people to take out large mortgages and not to pay back the capital. In August, the present Dutch cabinet banned mortgages which allowed borrowers only to pay the interest on their loan for extended periods of time.

Mr Knot says this measure was not enough and believes that tax relief should be reduced gradually throughout the duration of a mortgage. Dutch mortgage debt is among the greatest in the world and threatens the country’s households and banks, he warns.

Responding to Mr Knot’s ideas, Deputy Finance Minister was brief but clear: “This government isn’t going to mess with mortgage tax relief,” he said.

© Radio Netherlands Worldwide

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