An effort is being made to get NHG qualified as a guarantee under CRR and Solvency II which will increase attractiveness of NHG loans for foreign investors.
Download the full Dynamic Credit Quarterly Update 2019-Q4 here.
Changes are proposed to the NHG guarantee for mortgage loans that will lead to recognition as guarantee under Capital Requirements Regulation for banks. For insurers, under Solvency II, this qualification is however not as straightforward. For a loan with a recognized guarantee, the capital requirements under the standardized approach are significantly lower than without such protection. The Dutch Central Bank is trying to make the requirements equal under Solvency II (revisions) and to close the regulatory gap between the bank and insurance regimes.
”Non-eligibility of NHG as credit protection under CRR/Solvency II has been a hot topic recently. Progress towards eligibility has been made for banks as the required adjustments to the NHG guarantee are expected to be implemented in 2020-Q1. For insurance companies using the standard model a bit more work is needed but the required changes are taken into account in the consultation of the 2020 Solvency II revisions”Jasper Koops
Saturated BTL Market
The BTL market is becoming more saturated while in the fourth quarter of 2019 three new lenders for professional landlords entered the market. This is an interesting development while it followed on a period where new entrants were mostly focused on consumers.
Tight housing supply
The housing supply in the Dutch market remains very tight: quarter-on-quarter availability of houses for sale (a measure for supply) decreased whereas quarter-on-quarter sales (a measure for demand) remained roughly unchanged. Fewer building permits being issued in 2019 is a signal that supply growth from newly built properties will decrease.
Interest rate Netherlands
Across all major risk classes and all major fixed rate periods, the most competitive mortgage interest rates in the Netherlands decreased on average by 11 basis points quarter-on-quarter. NHG rates have decreased more steeply (-15 bps) as a result of foreign banks becoming active in that segment.
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Disclaimer Dynamic Credit Partners Europe B.V. (‘Dynamic Credit’) is a registered investment company (beleggingsondernemingsvergunning) and a registered financial service provider (financieel dienstverlener) with the Dutch Financial Markets Authority (Stichting 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.