Dutch mortgage spreads bottom out, and are expected to rise as mortgage rates increase again.

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Dutch mortgage spreads have been under pressure due to increasing swap rates, but are beginning to recover as mortgage rates are increasing. Expectations for the Dutch mortgage market in the medium to long-term are favorable, and it remains an interesting asset class with attractive returns.

Making mortgage portfolios more sustainable

We outline a scenario in which a mortgage portfolio can achieve the 50% emission reduction outlined in the 2019 Dutch Climate Agreement. We propose a mix of three passive and three active reductive measures, specifying an approximate reduction in percentages for each following analysis. The proposed measures give insight into how the climate goals for 2030 could be achieved.

House prices reaching new highs, again

The Dutch House Price Index shows no signs of slowing down. Following the record-breaking Q2-2021 (13% YoY increase), the 2021-Q3 YoY increase measured 17.5%, the largest increase in 20 years.

A take on housing market reforms

While the formation of the Dutch government is ongoing, the DNB presented their views on which elements should be included in a comprehensive plan for the housing market. However, we do not expect significant changes other than an increase of the pace of implementation of the already planned reduction of interest rate deductibility and potentially the abolishment of tax-free gifts, as hardly any political party proposed stringent housing measures in their party programs.

Consumer confidence slightly down

After a steep increase in the previous quarter, consumer confidence has dropped slightly in the third quarter. Most notably, the number of people expecting further house price increases, rose from 69% last quarter to 74% now.

Energy poverty in the Netherlands

Although gas prices have been increasing throughout the year, the increase was especially large in September with major consequences for consumers and businesses. Many countries already announced measures to support these parties financially. In the Netherlands, measures have been announced to reduce the burden on consumers, as a large group faces energy poverty.

Disclaimer Dynamic Credit Partners Europe B.V. (‘Dynamic Credit’) is a registered investment company (beleggingsondernemingsvergunning) and a registered financial service provider (financiëel dienstverlener) with the Dutch Authority for the Financial Markets (Autoriteit Financiële Markten). This presentation is intended for informational purposes only and is subject to change without any notice.The information provided is purely of an indicative nature and is not intended as an offer, investment advice, solicitation or recommendation for the purchase or sale of any security or financial instrument. Dynamic Credit may in the future issue, other communications that are inconsistent with, and reach different conclusions from, the information presented herein. Dynamic Credit cannot be held liable for the content of this presentation or any decision made by a third party on the basis of this presentation. Potential investors are advised to consult their independent investment and tax adviser before making an investment decision. An investment involves risks. The value of securities may fluctuate. Past returns are no guarantee for future returns.