Spread levels normalizing, home prices increasing at a slower rate, and will mortgage rates in the Netherlands go negative as they did in Denmark? Find out now in our Q3 Dutch Mortgage Market Update.
Download the full Dynamic Credit Dutch Mortgage Market Update Q3 2019 here.
Spread levels normalized
In the previous quarter, mortgage spreads reached levels that were higher than previously seen in 2018 and 2019 as mortgage rates were slow to respond to decreases in swap rates. That trend continued at the beginning of 2019-Q3 but a significant reaction came in August and September as mortgage rates in the Netherlands decreased by 37 basis points on average across major fixed rate periods and risk classes during the quarter. Rate decreases continued in October but slowed down towards the end of the month.
House prices are still increasing but the pace is slowing down
Increases of 1.8% during 2019-Q3 were higher than in the previous quarter (1.1%). Prices in the 4 main Randstad municipalities all had lower QoQ growth than the national average, highlighted by Amsterdam where prices only increased 0.6% QoQ. Drenthe (+3.4% QoQ) and Groningen province (+3.1%) increased the fastest. Prices in Noord-Holland only increased 1.1% QoQ.
Negative mortgage rates in Denmark are not comparable to Dutch rates
Lately there has been increased attention from Dutch news outlets on Danish mortgage rates. The reason was a Danish Bank launching a mortgage with a negative coupon rate during the quarter which triggered the question if Dutch rates would also get into negative territory. We have investigated the differences between Dutch and Danish mortgages.
Spoiler alert: Danish rates are not comparable to Dutch rates and negative rates are very unlikely in the Netherlands.
”The summer ended with steep decreases in mortgage rates, as a
delayed response to decreasing swap rates, resulted in spread levels
normalizing. We expect the NHG market share to sharply increase in 2020-Q1, reflecting the upcoming increase in NHG limit from EUR 290K to EUR 310K.”Jasper Koops
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