Financial watchdog warns about mortgages
Mortgages where the borrowed sum is higher than the value of the house are worrying in bad economic times, says AFM.THE NETHERLANDS – The financial services watchdog Financial Markets Authority (AFM) says it is extremely concerned about mortgages where the borrowed sum is higher than the value of the house.
Such mortgages are usually unsafe as people tend to pay off the interest only and do not actually pay off the capital, said the chairman of AFM, Hans Hoogervorst.
The AFM has long been critical of banks lending money too readily to house buyers.
Hoogervorst added increasing unemployment and falling house prices could spell problems for banks which hand out unsafe mortgages. He believes the AFM needs more powers, such as the ability to impose higher fines, to keep the banks in order.
[Radio Netherlands / Expatica]