950,000 Dutch households could face higher mortgage costs, DNB says

About 950,000 households in the Netherlands could see their mortgage costs rise in the coming years, the Dutch central bank DNB said on Thursday. These homeowners have a variable interest rate, or a fixed rate period that ends before the end of 2028.

Mortgage rates have risen sharply. Five years ago, the average rate on new mortgages was around 1.6 percent, against almost 4 percent now, DNB says. Many existing homeowners fixed their rate for a long time and have barely noticed the rise so far, but their new rate can be much higher when the fixed period ends.

How much more

For the average affected household, gross monthly payments could rise by about 150 euros. The differences are large: for a quarter of these households the rise is less than 50 euros a month, while another quarter could pay more than 300 euros extra. The net increase can be lower because of mortgage interest tax relief, which DNB did not include.

For the average household, gross mortgage costs would rise from 20 percent to 24 percent of net income. The share of these households spending more than 40 percent of their net income on mortgage costs could double from 4 percent to 8 percent, or from about 30,000 to about 60,000 households.

Most can cope

DNB says most households seem able to absorb the higher costs. Wages have risen strongly in recent years, and mortgage debt has fallen compared with income and house values. Households whose higher costs come with weaker finances or a drop in income, for example through unemployment or retirement, could come under pressure.

The effect will come gradually. For most outstanding mortgage debt, the fixed rate period ends later: for 27 percent between 2029 and 2033, and for 48 percent after that.