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Dutch housing market benefits from favourable market conditions

Dutch Housing Market Quarterly

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  • Economic growth to continue in 2016
  • Purchasing power continues to grow and more jobs are becoming available
  • We also expect mortgage interest rates to remain low     
  • House prices and the number of house sales will therefore continue to rise in 2016
  • House prices will increase by between 2¾ and 4¾% compared to 2015
  • The number of transactions will rise from 178,000 in 2015 to between 180,000 and 200,000 in 2016


Economic dynamism positive for the housing market

GDP volume is expected to have grown by 2% in 2015 compared to 2014, and we anticipate further growth of 2½% in 2016. Growing purchasing power and rising employment are positive factors affecting domestic expenditure and the housing market.

Further rise in number of transactions and house prices

During the fourth quarter of 2015 the Land Registry recorded almost 52,500 transactions; not since 2007 have so many homes changed ownership in a single quarter. House prices rose by 2.8% compared to the fourth quarter of 2014, which also represents the biggest increase since the crisis. Although there are regional differences, we are seeing the number of sales picking up in virtually all regions of the country, which is now causing reduced supply on the market. This may mean that house prices will rise further.

In 2016 we expect a further rise in prices and sales. As no major policy measures were introduced on 1 January 2016, we do not expect house sales to have been brought forward to the fourth quarter, as has been the case in the last few years. As a result, the fall in the number of house sales in 2016Q1 will be less marked than in previous years. The very high number of sales contracts (with NVM-brokers, which lag two to three months on average) in the fourth quarter supports this expectation. At the same time, we do not expect the strong rise in the number of transactions seen in the last few years (2014: + 39% and 2015: +16%) to continue in 2016. We forecast that growth will flatten off to between 1 and 12%, to a total of between 180,000 and 200,000 sales. For the house price index, however, we do in fact expect to see faster growth. The average house price index is expected to rise by between 2¾ and 4¾% in 2016, following a 0.9% rise in 2014 and 2.8% in 2015.

National mortgage debt is stabilising, payment capacity rising slightly

With the number of house sales picking up, total mortgage debt in the Netherlands is expected to have risen further in the fourth quarter of 2015. The debt falls as mortgages are repaid, and rises due to new mortgage approvals. On balance we expect the level of total mortgage debt to show a further modest rise in 2016.

Household borrowing capacity is expected to rise slightly in 2016. Borrowing capacity is determined by the debt-to-income limits, the level of household income and mortgage interest rates. As the Minister of Finance has adopted the advice from the National Institute for Family Finance Information (Nibud) to allow the second income to be taken slightly more into account, the debt-to-income limits for dual-income households have been relaxed a little. We also anticipate further income rises and expect the average mortgage interest rates to remain low in 2016. As a result, we expect to see a rise of almost 1% on average in borrowing capacity.



Chapter 1: Economic background

Growth in the Dutch economy was weak during the second and third quarter of 2015, and the increase in GDP volume is likely to have been limited during the fourth quarter of last year. But thanks to the high starting level of economic activity and strong growth in the first quarter, we do nevertheless expect growth figures of 2% for 2015 as a whole compared to 2014. In 2016 we foresee growth accelerating to an average of 2½% (Table 1).

Table 1: Key figures for the Netherlands
Table 1: Key figures for the NetherlandsSource: CBS, Rabobank

Increases in purchasing power, not least due to the EUR 5 billion tax reduction package, growth in employment, rising house prices and improving consumer confidence all have a positive effect on domestic expenditure. Thanks to further economic growth among our major trading partners, we expect slightly higher growth in exports in 2016. Global uncertainties do however produce significant downward risks to this overall picture. 


Purchasing power boosted by low inflation and tax reduction package

According to the comparable European Harmonised Index of Consumer Prices (HCIP), Dutch inflation was 0.2% on average in 2015. This is the lowest recorded rate of inflation since the start of the indicator in 1997. We expect inflation in the Netherlands to rise gradually in 2016 as the economy picks up, reaching an average of 1%. This figure may be somewhat lower due to the fall in oil prices at the start of the year.

Low inflation is positive for the household disposable income. Negotiated wages have been rising faster than average prices since 2014, contributing above all in 2015 to real wage rises (Figure 1). The EUR 5 billion tax reduction package in 2016 and the further rise in employment positively affect disposable household income, its relatively strong rise being favourable for growth in household consumer expenditure, but also house price trends this year (see Chapter 2).

Figure 1: Positive real wage trends
Figure 1: Positive real wage trendsSource: Statistics Netherlands
Figure 2: Growth in temporary agency work points to rising employment
Figure 2: Growth in temporary agency work points to rising employmentSource: Statistics Netherlands

Growth in employment expected in 2016

Average unemployment in 2015 was 6.9%, a modest fall compared to the 7.4% in 2014. In 2016 we expect a further recovery on the labour market. With economic growth picking up, a number of indicators point to a further rise in employment. Trends in temporary agency work are a predictor of the increase in the number of persons working in the private labour market (Figure 2). The amount of temporary agency work has been rising for seven quarters in a row and has reached its highest level since the end of 2008, indicating further growth in employment. In addition, the number of vacancies has been rising for nine months in succession. The fall in employment in the care sector will probably be not as marked as in 2015, as the heaviest blows caused by cuts and reforms in that sector have probably already been dealt. On the other hand, the number of people seeking work in 2016 is likely to increase due to higher employment participation, which will put a brake on falling unemployment. On balance we expect the growth in employment to be significant enough to cause unemployment to fall to an average of 6¼% in 2016.

Exports benefit from growth among trading partners, international environment uncertain

Domestic economic activity has thus been given the green light this year. As far as growth in exports of goods and services is concerned, the Netherlands will benefit in 2016 from a further fall in value of the euro against the US dollar. We also anticipate in 2016 slightly higher economic growth in the eurozone, which is still the major trading region for the Netherlands. At the same time there are significant international uncertainties. A sharper slowdown than expected in China’s growth, a potential weakening of global trade or a too rapid rise in interest rates in the United States form a downward risk to our growth expectations for Dutch exports. Even so, the positive domestic activity, which is particularly important for the housing market, is not expected suddenly to come to a halt if export growth figures are disappointing.

Pieter van Dalen

Chapter 2: The market for existing owner-occupied homes

In 2015, 178,293 homes changed ownership, a rise of 16% compared to 2014. Last year has therefore seen the highest number of sale transactions since 2008. Prices rose much more strongly in 2015 (+2.8%) than in 2014 (+0.9%). In 2016 we expect lower growth in the number of transactions (180,000 – 200,000) and further house price increases (2¾ to 4¾%).

2.1 Factors determining current trends in the housing market

The increase in activity on the housing market continued into the fourth quarter of 2015. The main causes of this trend were lower interest rates (Chapter 3), the prospect of further rises in purchasing power in 2016 and solid economic growth (see Chapter 1). This creates a climate in which consumer confidence can grow, new house-building activity picks up and affordability is reduced but still remains good.

Confidence in the owner-occupied housing market

Figure 3: Confidence points to more transactions
Figure 3: Confidence points to more transactionsSource: VEH, Statistics Netherlands, computation Rabobank

Consumer confidence in the owner-occupied housing market rose in recent months to new record levels. This confidence is measured using the Eigen Huis Market Indicator, published by the Homeowners’ Association (Vereniging Eigen Huis) and recorded a value of 112 in December 2015. Following several months of a slight decline, confidence rose again during the second half of the year. High levels of confidence generally lead to an increase in the number of transactions for existing homes (Figure 3).

New homes

The fact that consumer confidence is reaching high levels is a pattern that we also see in the strong growth in the number of building permits granted during the second half of last year. Consumers are prepared to take a risk again to buy a new home which will not be ready for them for at least a year, while their present home has not yet been sold. Job security and confidence in economic growth are important for a recovery in the construction of new houses. Consequently the market for new housing gives a delayed response and is highly sensitive to the state of the economy. We expect the building sector to have been one of the strongest growing sectors in the Dutch economy in 2015.

Figure 4: Rise in number of building permits (up to end of November 2015)
Figure 4: Rise in number of building permits (up to end of November 2015)Source: Statistics Netherlands, computation Rabobank

Despite the rise, the number of building permits (rental and owner-occupied properties) will probably remain at around the 55,000 mark in 2015. For the owner-occupied sector, the number of building permits is expected to be just under 40,000 (Figure 4). Historically speaking this is low, and from a social point of view too low. In order to meet the rising and changing demand for houses, between 80,000 and 90,000 rented and owner-occupied homes need to be built each year, according to ABF Research (Primos forecasts 2015). 


Figure 5: Affordability remains good
Figure 5: Affordability remains goodSource: Calcasa

The affordability of owner-occupied homes will remain good in 2016, even though there was some slight deterioration in the fourth quarter of 2015 (Calcasa, 2015). At the moment of purchase, households spend an average of 16.5% of their income on housing costs (16.1% in the second quarter). These figures show that the affordability of homes is good; housing costs are still considerably lower than in previous years. The affordability index has varied over the past 50 years between 14% (1986) and 32% (2008; Figure 5). We expect a very limited decline in the Calcasa affordability index, largely due to mortgage interest rates remaining low (Chapter 3) and household incomes rising (Chapter 1).

2.2 More transactions and higher house prices in the fourth quarter

Transactions and supply

Favourable market conditions for existing owner-occupied homes during the fourth quarter of 2015 resulted in 52,435 houses changing ownership. This is the highest number of sales in a quarter since 2007. 1,826 more houses were sold than in the third quarter, and 1,121 more than in the fourth quarter of 2014. The number of transactions in the fourth quarter has nearly always been higher than in the other quarters. This recurring pattern makes it not so easy to identify the underlying market trends, and that is why we adjust the figures for seasonal patterns, which allows us to compare quarterly figures without these seasonal effects.

During the fourth quarter of 2015, the adjusted number fell by almost three thousand (the blue line in Figure 6).[1] Unfortunately the statistical method we use to adjust for seasonal effects is less useful at present.

Figure 6: Number of transactions per quarter, fourth quarter almost always high
Figure 6: Number of transactions per quarter, fourth quarter almost always highSource: Statistics Netherlands, computation Rabobank

As a result, identifying recent market trends is not as easy as it was a few years ago, due to the many policy changes introduced during the past few years. The fall in adjusted sales is because the rate at which the actual number of the transactions in this quarter has risen is less than had been normal for a fourth quarter in previous years (see box). Unlike previous years, this means that the number of transactions in the first quarter of 2016 adjusted for seasonal effects will in fact be relatively high. The new record number of recorded sales contracts (NVM) in the fourth quarter of 2015 underlines this expectation.[2] The actual transfer of ownership is two to three months after sale. 

Box 1: Seasonal adjustment in the fourth quarter of 2015

The number of homes sold shows a specific pattern. Each year a relatively large number of homes are sold during the fourth quarter. This is to do with tax rules. Capital gains tax (vermogensrendementsheffing) makes it an attractive option to purchase a house using all or some of the buyer’s own funds before the end of the year. In addition, a purchase before the end of the year means that the costs incurred for financing the house are still tax-deductible in that year. We have seen this seasonal pattern over many years. The consequence of the high number of sales in the fourth quarter means that each year we observe a relatively low number of sales in the first quarter.

Specifically for recent years, however, changes to the tax and mortgage rules commencing on 1 January of the following year have produced an extra peak in house transactions in the fourth quarters of 2012, 2013 and 2014. Think of the restrictions in the use of savings and interest-only mortgages, the sharp reductions in the debt-to-income limits and the expiry of the temporary extension of the limit for tax-free gifts. By arranging the transfer by the end of December, it was still possible to take out a mortgage under the old conditions. As a result, the share of the fourth quarter in the annual total number of sales of existing owner-occupied homes rose from around 27% in 2012 to 33% in 2014. We referred to this behaviour as the end-of-year rally. This increased activity at the end of the year has occurred so often during recent years that our statistical method to adjust for seasonal effects now interprets this as a normal seasonal pattern.

However, no major policy changes were introduced on 1 January 2016. Only the maximum mortgage sum has been reduced from 103% to 102% of the assessed value with effect from 1 January 2016. On the other hand, household borrowing capacity has in fact risen (Chapter 3), which gives good reason to postpone the sale and not, as previously, to bring the sale forward. As a result, the fourth quarter of 2015 did not experience an end-of-year rally.

Much of the fall in the number of seasonally adjusted transactions in the fourth quarter of 2015 can be explained by the absence of major policy changes. We therefore do not consider the fall of three thousand seasonally adjusted transactions compared to the third quarter to be a turning point from growth to contraction.

Figure 7: Transactions in the fourth quarter of 2015 lower due to absence of end-of-year rally
Figure 7: Transactions in the fourth quarter of 2015 lower due to absence of end-of-year rallySource: Statistics Netherlands, computation Rabobank

In 2015 as a whole, 178,000 houses changed ownership. Figure 7 shows the quarterly trends each year. This represents an increase of 16% compared to 2014, following an increase of 39% in the number of house sales in 2014 compared to 2013.

Still plenty of supply in the market

Despite the growth in the number of transactions, there are still plenty of owner-occupied homes available on the market. The NVM shortage indicator, which divides the total number of houses for sale by the number of transactions, stabilised in the fourth quarter at a seasonally adjusted value of 11, a level just below that of the fourth quarter of 2008 (13). The NVM defines a market shortage as one where the indicator falls below 4 (Van der Heijden et al., 2015). A normal market is where the indicator is between 4 and 6, and the NVM uses the term ‘relaxed market’ (ontspannen markt) with an indicator of between 6 and 10. There is ample supply on the market if the indicator rises above 10. This means that at a national level it is still a buyers’ market, with plenty of homes for sale.

Figure 8: Shortage indicator falling
Figure 8: Shortage indicator fallingSource: NVM, computation Rabobank

However, this criterion for shortage differences does vary from segment to segment. For example, there is still ample supply on the market for detached and semi-detached houses, but the indicator has dropped below 10 for the other house types (Figure 8). We will discuss the regional differences in paragraph 2.4. 

Rising house prices

During the fourth quarter, seasonally adjusted house prices rose by 1.1% compared to the third quarter (Figure 9). If we compare the annual averages, we see that the house price index rose by 2.8% from 2014 to 2015, following growth of 0.9% in the previous year. The seasonally adjusted price index for December 2015 was 6.4% higher than at its lowest point in June 2013, but was still 15.9% lower than the peak in June 2008 (Figure 10).

Figure 9: House price trends 3m/3m and movements on an annual basis
Figure 9: House price trends 3m/3m and movements on an annual basisSource: Statistics Netherlands, computation Rabobank
Figure 10: Nominal house prices
Figure 10: Nominal house pricesSource: Statistics Netherlands, Macrobond, computation Rabobank

2.3 Forecasts for 2016

We expect between 180,000 and 200,000 existing homes to be sold in 2016 (Figure 11). This represents a rise of between 1 and 12% compared to the previous year. Following a rise of 39% in 2014 and 16% in 2015, the rate of growth will therefore continue to slow down this year. In 2016 we anticipate the House Price Index (PBK) rising by between 2¾ and 4¾% compared to 2015 (Figure 12), so that prices will rise at a slightly faster rate compared to previous years.

These estimates are based on solid economic growth, rising household incomes and the expectation that mortgage interest rates will remain low. However, affordability will be reduced as house prices rise, but even in 2016 buyers will spend less on housing costs than the long-term average. These trends will ensure that consumer confidence in the housing market remains high. There are uncertainties too, especially negative developments abroad which may adversely affect economic growth in the Netherlands (Chapter 1) and therefore could have a less positive or even negative effect on the number of house sales and house prices.

Figure 11: Transaction expectations in 2016
Figure 11: Transaction expectations in 2016Source: Rabobank, Land Registry
Figure 12: Estimate of house price trends in 2016
Figure 12: Estimate of house price trends in 2016Source: Rabobank, Statistics Netherlands

2.4 Further growth in regional housing markets

Transactions and shortages

Map 1: Regional growth in transaction numbers
Map 1: Regional growth in transaction numbersSource: Land Registry, computation Rabobank

The national recovery on the housing market has also taken hold in the forty regions (Aalders and van Dalen, 2015). Between the third quarter of 2014 and the third quarter of 2015, the four-quarterly total of sales of existing owner-occupied homes rose in every region, varying from 5% in Zeeuws-Vlaanderen to 37% in Southwest Overijssel (Map 1). Even in the peripheral regions of East Groningen, the Achterhoek and North Limburg, the rise exceeded 30%.

If the supply remains constant or rises more slowly, more transactions will lead to reduced supply. The shortage indicator has returned to the level seen at the end of 2008 in virtually all regions (Figure 13). There are shortages in the market in Amsterdam, and we see a strained market in the three other large cities (Figure 14).

Figure 13: Shortages in almost all regions back at 2008Q4 levels
Figure 13: Shortages in almost all regions back at 2008Q4 levelsSource: Land Registry and Huizenzoeker.nl, computation Rabobank
Figure 14: Supply in the major cities less than the national average
Figure 14: Supply in the major cities less than the national averageSource: NVM, computation Rabobank

House price

Figure 15: Number of municipalities with rising/falling average sale prices
Figure 15: Number of municipalities with rising/falling average sale pricesSource: Land Registry, computation Rabobank

At a regional level, we particularly see differences in the rate at which sale prices are rising[3]. Although prices are rising in a large number of municipalities (Figure 15), there are differences in this growth rate. For example, house prices in Amsterdam rose by 11% during the past four quarters, well above the national average (3.6%). If we look at housing market segments, we see that it is in the very highly urbanised areas above all where house prices are rising strongly (by an average of 7.7% over the past four quarters). It is also striking that the price recovery in the strongly urbanised municipalities took hold earlier. The low point was in the second quarter of 2013. The strongly and moderately urbanised municipalities reached their low point a quarter later. In little urbanised and non-urbanised municipalities, the low point was only reached in the first quarter of 2014. These would appear to be small differences, but they show that the recovery began earlier in the more urbanised municipalities, spreading out from there to the rest of the country. 

2.5 Looking ahead to 2020, demographics becoming important

Demographics will become a major factor for the housing market in the coming years

Figure 16: Growth in number of households: more under 35 and over 55 years
Figure 16: Growth in number of households: more under 35 and over 55 yearsSource: Statistics Netherlands, computation Rabobank

Younger people are more active on the housing market than older people. As a result, the number of transactions also depends on demographic developments. We expect there to be around 80,000 25-35 year-old households and 400,000 households in the category of 55 years and older during the coming four years. The number of households younger than 25 years will fall, as will the group aged between 45 and 55 years (Figure 16).

The group with the highest propensity to move house is becoming larger

Figure 17: Percentage of buyers within the age groups
Figure 17: Percentage of buyers within the age groupsSource: Statistics Netherlands, Rabobank

Starters and young adults create dynamism on the housing market; in the age category up to 35 years the share of buyers is much larger than in the other age categories (Figure 17). The share of those over 55 years buying a house is the lowest. The figure below shows that the willingness to buy a house fell across all age groups during the crisis years (2008–2013) and has been rising again since 2014.

In order to make a forecast for the coming years, we have extrapolated the most recent trends (Figure 17, dotted lines) taking account of the level before the crisis and the current housing market situation. We expect, for example, that the youngest age category up to 25 years will be less inclined to buy than previously (therefore more will rent or remain living with parents). This is a result of changing regulations. During the past few years the group of 25–35 year-olds have taken over the top position from the youngest group, and are now the most active on the housing market. This is in line with our picture that those buying a house for the first time are becoming older (De Vries en Van Dalen, 2015). Another reason why the group of 25–35 year-olds is so much more active on the housing market is probably because they postponed their first purchase during the crisis years. It would seem that there has been catch-up demand. Among older people too, the willingness to buy is growing. The reason, we believe, is mainly that more and more people over the age of 55 years own their house, so that the percentage of houses bought in this age category automatically rises.

Effect on the number of transactions

If we combine the demographic trends with the degree of activity among the various groups on the housing market, we can conclude that the number of houses sold due to demographic movements is likely to rise by around 18% until the year 2020 (Figure 18). However, we do see differences between the cohorts. The number of buyers under the age of 25 years is falling (-14%), just as the number of 35–45 year-olds (-6%) and 45-55 year-olds (-4%). The rising groups are those aged 25 to 35 years (25%) and over 55 years (83%). The spectacular rise in the number of people over 55 years is mainly because so many households are being added to this age category.

These results depend on trends among the age groups as regards their propensity to move house. Let’s imagine that we do not extrapolate the trends in Figure 17 but keep them constant, in which case the number of transactions will grow not by 18%, but by only 2%. Strong growth in the group over 55 years will then not be evident.

Figure 18: Number of houses sold according to buyer age (market shares)
Figure 18: Number of houses sold according to buyer age (market shares)Source: Statistics Netherlands, Rabobank

We can conclude that the profile of the potential house buyer is expected to look different to how it is now. The housing market will increasingly become a market in which the group of 25-35 year-olds will have an ever larger share, whereas the group over 55 years, instead of being the least important, may become the second most important group (Figure 18).

Paul de Vries and Rogier Aalders

Chapter 3: Mortgage trends

Total mortgage debt is expected to have continued to rise during the fourth quarter of 2015, in line with the rise in the number of new mortgage approvals. In 2015 as a whole the level of mortgage debt, following the falls in 2014 and 2015, has now risen again slightly. For most households, borrowing capacity in 2016 will increase. We also expect average mortgage interest rates to remain low in 2016.

3.1 Mortgage debt has risen

Total mortgage debt rose in the third quarter of 2015 by more than EUR 2.5 billion, reaching a level of EUR 637.6 billion (Figure 19).[4] The volume of mortgage approvals was therefore greater than the repayments. Figures for the total mortgage debt in the fourth quarter of 2015 (including mortgages issued by insurers and pension funds) are not yet available at the time of writing, but based on the monthly figures available for mortgage lending by the banks we expect virtually no change in the total mortgage debt in the fourth quarter.

Even if the mortgage debt is not higher in the fourth quarter, the total mortgage debt for 2015 as a whole has in fact risen. During the last quarter of 2014 the total mortgage debt among Dutch households was EUR 633.7 billion, rising at the end of the third quarter of 2015 to EUR 637.6 billion (Figure 19).

Figure 19: Value of existing mortgages
Figure 19: Value of existing mortgagesSource: DNB
Figure 20: New mortgage approvals
Figure 20: New mortgage approvalsSource: Land Registry, computation Rabobank

Rise in new mortgages

During the fourth quarter of 2015 some EUR 12.6 billion (EUR 11.1 billion seasonally adjusted) was lent in new home mortgages (Figure 20). This was a rise of 6.1% compared to the same quarter the previous year, and a fall of 9.8% compared to the third quarter of 2015 (seasonally adjusted). During the fourth quarter the number of refinancing transactions or extra borrowing remained virtually the same (Figure 20). But compared to previous quarters, the level of refinancing or extra borrowing transactions is relatively high. Historically low mortgage interest rates have been the reason for more and more people to refinance with a different mortgage lender or borrow more on their homes[5].

For 2016 we expect the number of new mortgage approvals to continue to rise, in line with the limited rise in the number of house transactions and house prices (See Chapter 2).

Higher repayments

Against the rise in the number of new mortgage approvals, there were also a relatively high number of extra repayments in 2015. This has a dampening effect on the rise in total mortgage debt. Although total mortgage debt in 2015 is expected to have risen in 2015, just as in previous years households have been making extra repayments on their mortgages. This means that the amount of extra repayments has also risen during recent years.

The extra repayments have been prompted largely by persistently low savings interest rates. Negative equity can also have been a reason for making extra repayments. But this negative equity plays a more limited role now than in previous years, since the residual debt problem has lessened further during the past year (Van Dalen and De Vries, 2015). It has also become apparent that only a limited proportion of the extra repayments have been made by homeowners in negative equity (DNB, 2015). As long as savings interest rates remain low, many homeowners will choose to repay their mortgages or build up capital in a savings mortgage (with a bank or elsewhere) rather than putting it into their regular savings accounts. On the other hand, repayments via gifts from 2017 onwards will again be made more attractive for tax purposes if a large amount is involved. This may cause homeowners to postpone extra repayments.

On balance, we expect the level of total mortgage debt to rise modestly in 2016. Compared to the expected rise in the number of new mortgage approvals as a result of more house sales and rising house prices, just as in previous years homeowners will continue to make extra repayments on their mortgages.

3.2 Borrowing capacity expected to rise in 2016

The debt-to-income limits, as proposed by Nibud, determine together with the income and mortgage interest rates the borrowing capacity, and with it the maximum mortgage sum that households can borrow. Since the crisis the maximum debt-to-income limits have been reduced significantly, causing in turn the borrowing capacity to fall. However, these tighter credit standards have been compensated considerably by falling mortgage interest rates and rising incomes (Van Dalen and De Vries, 2016). Borrowing capacity in the period from 2008 to 2015, for example, fell by roughly 8%. Without falls in mortgage rates and rises in incomes, this would have been around 13% and 17% respectively.

The expected trends in the average borrowing capacity therefore depend heavily on assumptions on the expected trends in mortgage interest rates and income levels. Based on expected trends in these three factors, we can determine what the expected borrowing capacity will be for 2016. We expect average borrowing capacity this year to rise by almost 1%.

As far as debt-to-income limits are concerned (the maximum percentage of income that households may spend on mortgage repayments; the ‘Nibud standard’) the main change has been that in the standards for 2016 the second income will no longer count for 33%, but 50%. We also assume an estimated rise in household income this year of 1.6 (CPB, 2015) and an average fall in the capital market rate of 0.1%.

3.3 Low mortgage interest rates

Following some stabilisation of mortgage interest rates in the third quarter of 2015, rates continued to fall further in the last quarter of 2015 (Figure 21). In December 2015 the average rate for new mortgage approvals was 2.62% for a fixed-rate period of one to five years, 2.77% for a fixed-rate period of six to ten years, and 3.21% for a fixed-interest period of longer than ten years (DNB). In January 2015 this was 2.95%, 3.28% and 3.86% respectively. These average mortgage interest rates have therefore reached record lows for all fixed-rate periods.

There was a clear divide in mortgage interest rate trends during the period from August to October 2015 (Figure 21). The rates for fixed-rate periods up to ten years did indeed fall, but the rates for longer periods in fact rose slightly. We also saw this in the rise in long-term spreads for the capital market rates, compared to the 10-year euro swap rate. These rose from April to July 2015 by around 0.30% for the 20-year euro swap rate and the 30-year euro swap rate, contributing to upward pressure on mortgage interest rates for terms longer than ten years. In December 2015 mortgage interest rates for a fixed-rate period of longer than ten years were once again back to the level of July 2015. However, the difference with the six to ten year fixed-rate mortgages is still somewhat higher than was previously the case.

The 10-year euro swap rate fell at the start of February 2016 to 0.62% (Figure 22). In the short term we do expect a slight rise to 0.85% over a period of three months, after which it will fall back to 0.70% over a period of twelve months. This means that the average 10-year swap rate in 2016 is expected to be slightly lower than last year.

Figure 21: Interest rates for new mortgages
Figure 21: Interest rates for new mortgagesSource: DNB
Figure 22: Falling swap rates
Figure 22: Falling swap ratesSource: Macrobond

In addition, recent emissions of residential mortgage-backed securities (RMBS) and covered bonds by banks and insurers show that the associated spreads have risen slightly over the past few months. These spreads can be seen as an indicator for the risk premium that banks have to pay if they attract capital market finance to provide mortgages. Insurers and pension funds, on the other hand, are less dependent on external financing because they provide mortgages as an investment of the pension contribution or insurance premiums paid by members. These parties play an increasingly important role in the mortgage market, and as a result put downward pressure on mortgage interest rates through increased competition.

We do expect that, on balance, average mortgage interest rates will remain low in 2016.

Björn Giesbergen


[1] Our seasonal adjustments smooth out observed trends for long-term monthly or quarterly effects.

[2] Although this is a new record for sales contracts concluded by NVM estate agents, it is probably not a record for the owner-occupied housing market as a whole because the market share of NVM estate agents has increased.

[3] No Existing Homes Price Index is available for the regional sales analysis. We therefore use the running four-quarterly average of the average sale price. We have explained the disadvantages of this standard in our Special on the regional housing markets (Aalders and Van Dalen, 2015)

[4] This EUR € 637.6 billion concerns the gross mortgage debt. This has not been adjusted for capital accrued in savings mortgages (Spaarrekening Eigen Woning - SEW) and capital insurance policies (Kapitaalverzekering Eigen Woning - KEW). Researchers at the Dutch Central Bank (DNB) estimate this accrued capital to be worth EUR 31-37 billion (DNB, 2015). Since the accrued capital in savings mortgages will increase faster for a relatively large group of households in the coming years due to the cumulative return on capital, the net mortgage debt will rise more slowly than the gross mortgage debt and this net debt may even fall while the gross debt rises.

[5] Incidentally, the Dutch Land Registry does not record any interest rate changes with the same mortgage lender during or at the end of the fixed-rate period.


CPB (2015). Decemberraming 2015: economische vooruitzichten 2016.

DNB (2015). Dutch mortgages in the DNB loan level data. Occasional Studies, vol. 13-4. De Nederlandsche Bank, Amsterdam.

Heijden, Van der H., Groetelaers D., Dol, K. & Lamain C. (2015) Concurrentie en keuze op de markt voor nieuwe koopwoningen, 2015.

Van Dalen and De Vries (2015). Dutch housing market: slowly but surely, more homes move into positive equity. Rabobank, Utrecht.

Van Dalen and De Vries (2016). Stijgende inkomens en dalende hypotheekrente compenseren voor een aanzienlijk deel de strengere Nibud-normen.


Prices and sales
Prices and salesSource: CBS, Rabobank
Various house price measurements
Various house price measurementsSource: CBS, Calcasa, NVM, Kadaster
Issued building permits
Issued building permitsSource: CBS
Capital market: various countries
Capital market: various countriesSource: Macrobond
3-month Euribor
3-month EuriborSource: Macrobond
Interest rate on new mortgages by term
Interest rate on new mortgages by termSource: DNB, Rabobank
Volume of existing mortgages by institute
Volume of existing mortgages by instituteSource: DNB
Volume of new mortgages by term
Volume of new mortgages by term Source: DNB
Unemployment in the Netherlands
Unemployment in the NetherlandsSource: CBS
International comparison of unemployment
International comparison of unemploymentSource: Eurostat
International house price development
International house price developmentSource: Dallas Fed
Economic expectations The Netherlands
Economic expectations The NetherlandsSource: CBS, Rabobank

Key data

Key data


The Dutch Housing Market Quarterly is a publication of Economic Research (ER) of Rabobank. The view presented in this publication has been based on data from sources we consider to be reliable. Among others. these include Macrobond, Land Registry, NVM, DNB, CPB and Statistics Netherlands. The date of completion is 4th February 2016.

This data has been carefully incorporated into our analyses. Rabobank accepts. however. no liability whatsoever should the data or prognoses presented in this publication contain any errors. The information concerned is of a general nature and is subject to change.

No rights may be derived from the information provided. Past results provide no guarantee for the future. Rabobank and all other providers of information contained in this brochure and on the websites to which it makes reference accept no liability whatsoever for the brochure’s content or for information provided on or via the websites.

The use of this publication in whole or in part is permitted only if accompanied by an acknowledgement of the source. The user of the information is responsible for any use of the information. The user is obliged to adhere to changes made by the Rabobank regarding the information’s use. Dutch law applies.

Economic Research can also be found on the internet: www.rabobank.com/economics

For more information. please call the ER secretariat on tel. +31 (0)30 – 216 6666 or send an email to ‘economics@rn.rabobank.nl’.

Text contributors:
Paul de Vries, Pieter van Dalen, Rogier Aalers and Björn Giesbergen

Text editors: 
Rogier Aalders and Enrico Versteegh 

Tim Legierse, head of Head Domestic Research, Rabobank Economic Research

Production coordinator:
Christel Frentz

© 2016 - Coöperatieve Centrale Raiffeisen-Boerenleenbank B,A., the Netherlands

Paul de Vries
RaboResearch Netherlands Rabobank KEO
+31 30 21 62666
Pieter van Dalen
Rabobank KEO
+31 30 21 2666
Rogier Aalders
RaboResearch Netherlands Rabobank KEO
+31 30 21 31393
Björn Giesbergen
RaboResearch Global Economics & Markets Rabobank KEO
+31 (0)30 21 62562

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