Market and asset class

Dutch housing market

The Netherlands has one of the strongest economies in the world and benefits from important fundamentals such as a strong labour market, a solid social security system (including unemployment insurance) and political stability. Supported by these factors, the Dutch housing market is a dynamic and well-functioning market with a housing stock of more than 8 million homes.

The Dutch government encourages homeownership through its tax system, allowing mortgage interest payments on owner-occupied properties to be deducted from the borrower's taxable income ('hypotheekrenteaftrek'). In order to qualify for this tax deduction, residential mortgages must be fully repaid over a 30 year period using an annuity repayment period.

Additionally, the Dutch government promotes homeownership through a national mortgage guarantee scheme, referred to as Nationale Hypotheek Garantie ('NHG'). NHG provides a safety net for both borrowers and mortgage lenders in case a borrower can no longer pay their mortgage. Residential mortgages are eligible for NHG up to a certain house value (€435,000 in 2024).

Asset class

Dutch mortgage market

The Netherlands is the fourth largest residential mortgage market in Europe, with over €800 billion in outstanding mortgage debt. The Dutch mortgage market is known to be efficiently organised with first class mortgage distribution and servicing, along with operational stability.

Dutch residential mortgages are typically originated by independent financial advisors ("IFAs"). IFAs offer residential mortgages from a wide range of lenders and are responsible for providing mortgage advice and guiding borrowers through the process. MUNT mortgages are exclusively distributed through a diversified and nationwide network of IFAs.

The Dutch mortgage market is highly regulated, with strict underwriting criteria and conservative lending standards. The regulatory environment also discourages excessive lending, as mortgage lenders must comply with LtV limits and mandatory affordability tests, which assess the household's ability to borrow.

Asset class

Mortgages as asset class

Dutch residential mortgages are an established asset class, recognised as a high-quality investment opportunity with an attractive risk/return profile.

Dutch residential mortgages have extremely low arrears and credit losses compared to other asset classes. Dutch borrowers exhibit a strong payment morale and the Dutch legal and regulatory environment discourages excessive lending through strict LtV limits and mandatory affordability tests.

Dutch residential mortgage rates are highly correlated with the EUR swap rates. Additionally, Dutch borrowers prefer to fix their mortgage rates for relatively long periods (≥ 10 years) compared to other European residential mortgage markets. As a result, Dutch residential mortgages are an excellent match for longer-term liabilities and make a valuable contribution to a traditional liability-driven investment (LDI) portfolio.

For more information on this asset class, please see our white paper 'Introduction to Dutch Residential Mortgages' on the insights page.

Asset class

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