Dutch mortgages

Dutch mortgage news for expats: maximum mortgages, unpredictable interest rates and more

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A new year means updated rules and requirements regarding buying a house and receiving a mortgage in the Netherlands.

Maximum mortgages in the Netherlands

The year 2017 is the final year that it is possible to partly finance the additional costs of buying a house in the Netherlands and arranging a mortgage by borrowing 101 percent of the market value. For example, if you buy a house for its market value of EUR 300,000, it is possible to cover EUR 3,000 additional costs by receiving a mortgage of EUR 303,000.

As of 1 January 2018, the maximum mortgage will be 100 percent of the market value. This means that any additional costs need to be financed with your own savings. The government stated the 100 percent loan-to-value is the bottom line for the future, which means no further reductions will take place.

Interest rate expectations

Although European Central Bank’s (ECB) inflation target of 2 percent was reached for the first time in February, the economy has not yet showed signs of improvement. At the end of 2016, the ECB extended its buy-back programme until December 2017, and the EU’s monetary policy will once again curb mortgage interest rates in 2017. Because of this, there is no expectation of a sharp decrease in interest rates as in 2016. The ECB will reduce their quantitative easing and it is likely that interest rates during 2018 will increase.

On the other hand, interest rates will be more unpredictable this year. In spite of the fluctuation, the maximum difference between highest and lowest interest rate thus far is 0.3 percent. By the end of 2017, ABN AMRO expects the flat interest rate for 10 years to be around 0.5 percent higher.

Higher maximum prices for NHG-backed mortgages

The lowest interest rates for mortgages in the Netherlands generally fall under the Dutch National Mortgage Guarantee scheme. Compared to mortgages at property market value, the annual difference is around 0.5 percent. However, NHG-backed mortgages require that recipients pay a one-time 1 percent fee.

In 2018, an NHG-backed mortgage will be available for houses that do not exceed a property value of EUR 265,000. In 2016, the maximum purchase price was set at EUR 231,132; 2017, therefore, marks the first time that there has been an increase in the maximum purchase price for NHG mortgages since it started decreasing in 2012. 

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