Netherlands to tighten mortgage regulations
Buyers will no longer be allowed to apply loans beyond 100 percent of the value of the property.THE HAGUE – Regulations governing mortgages are to be tightened considerably, announced the Netherlands Authority for the Financial Markets (AFM) Tuesday.
The stricter measures, which include establishing a maximum loan of 100 percent of the value of a property, come about as an increasing number of homeowners are unable to pay their mortgages.
Under the new move, house buyers will no longer be able to include the conveyancing fees and notary costs in their mortgages.
The guideline that buyers should be allowed to borrow no more than 4.5 times their annual income will also be more strictly applied.
Homeowners who want to apply for a second mortgage will also not be allowed to borrow more than what their house is worth.
The move has been slammed by Dutch Real Estate Agents' Association and the Home Owners' Association who claim this will be the final nail in the coffin for the Dutch property market.
House prices in the Netherlands fell by over three percent in the first three months of this year.
First-time buyers will be particularly hit by this move as past trends have shown that many of them were able to purchase their houses by taking a loan on the extra costs associated with the purchase. The extra cost totals around 10 percent of the value of the property.
The Home Owners' association described it as a "deathblow" for the housing market in the present economic climate while the Home Owners' Association is concerned that this will paralyse the already sluggish housing market, making it even harder for homeowners to sell their properties.
AFM chairman Hans Hoogervorst said companies granting mortgages will be able to depart from the new rules only in exceptional cases.
Radio Netherlands / Expatica