Demand for Dutch Mortgages surges in COVID-19 pandemic, limited use of payment holidays
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Dutch housing market stirs as Dutch Mortgage demand surges in light of COVID-19 pandemic, causing mortgage providers to react. Use of payment holidays supporting borrowers in financial hardship remains limited.
The Dutch government supported the economy by introducing new measures and expanding existing measures. Some were focussed on supporting credit and lending, others on employment and business continuity. Additionally, mortgage providers supported borrowers in temporary financial distress caused by the COVID-19 pandemic by not initiating forced foreclosures and by allowing payment holidays. On average, only 0.6% of Dutch mortgages received payment holidays, a very limited amount relative to other European countries.
“While the lockdown measures were in place, demand for Dutch mortgage loans surged due to frontloading of requests and an increase of requests for refinancing as mortgage rates were increasing.”Jasper Koops
Surge in offer volume during first months of crisis
Offer volumes peaked in March and April, with levels being 40-50% higher than in January. This surge coincided with the announced COVID-19 lockdown measures, causing borrowers to front-load their applications and sparking an increase in demand for refinancing as rates started to increase.
Dutch housing market stirs
In spite of consumer confidence reaching the lowest point since June 2014, almost 55,000 properties were sold in the last quarter, an increase of 6.5% QoQ and 4.9% YoY. Dutch house prices increased by 1.7% over April and May and 7.3% YoY, with 52% of houses being sold above ask-price. Despite persisting housing shortages, it is expected that house prices will decline at the end of 2020 and in 2021.
Interest rates rising across the board
Across all major risk classes and all major fixed rate periods, the top six most competitive rates increased by 17 basis points quarter-on-quarter across on average. The increase was larger in the higher LTV segments.
Mortgage spreads increase by an average of 35 basis points, as monetary easing measures cause swap rates to go down and interest rates increase. The average spread increase across all major fixed rate periods and all major risk classes was 35 basis points.
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