Minister to discourage excessive mortgages

5th July 2005, Comments 0 comments

5 July 2005, AMSTERDAM — Finance Minister Gerrit Zalm says he wants to agree a code of conduct with lending institutions to discourage the granting of exorbitant mortgages.

5 July 2005

AMSTERDAM — Finance Minister Gerrit Zalm says he wants to agree a code of conduct with lending institutions to discourage the granting of exorbitant mortgages.

In answer to a question by MPs Ferd Crone and Frank Heemskerk of the Labour Party (PvdA), Zalm wrote on Tuesday he wants to draw up an agreement with lenders and the competition watchdog NMa.

The minister said this agreement should be included in a code of conduct for mortgage lenders to end the granting of "tophypotheken", or home loans bigger than the liquidation value of the property.

The relation between the gross debt and net available income has risen in the last year by a record 225 percent in mortgage agreements.

Zalm said banks have a duty to prevent the supply of "over credit" to stop mortgage burdenss getting out of hand. In addition, financial service providers have to inform their clients adequately about the consequences of the mortgage being agreed.

The minister said banks have to take more account of a client's financial position and goals and the level of risk the client is prepared to shoulder. 

[Copyright Expatica News + ANP 2005]

Subject: Dutch news

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