Homebuyers Can Borrow More Through Wage Growth and Energy Savings

Buyers can get a higher mortgage next year. The rules governing the conclusion of such a loan remain unchanged, but due to rising wages, the amounts of Dutch loans from all income groups are also increasing. Minister Kajsa Ollongren (Home Affairs, D66) wrote this in the House of Representatives Thursday

The Bureau for Economic Policy Analysis of the Netherlands predicted an average wage increase of 2.9% for next year. Because buyers earn more, lenders give them more credit.

This ensures that two-earner households that still have a modest overall income – around € 37,000 – can borrow nearly € 4,800 more in 2019. For households with a collective income of € 75,000, this is even an increase of nearly 19,000 euros.

Ollongren could have chosen to prevent the increase in the amount of mortgages by the loan-to-value ratio (ltv) to limit, but the minister did not. This loan ratio determines the share of the purchase price that a home buyer can borrow as much as possible, and this remains at 100% for the time being.

Supervisors such as the AFM and the Nederlandsche Bank have called for a reduction in ltv to 80 or 90 percent of the purchase price this summer. They fear homeowners will encounter problems if the burden of debt increases. They are also worried that home prices will rise further if consumers are allowed to borrow more.

The mortgage rules on energy efficient homes will remain unchanged next year. Anyone who buys a house with, for example, solar panels and roof insulation, or who makes energy-saving adjustments on the owner-occupied house, can borrow up to At 106% of the purchase price. What also remains unchanged is that homebuyers with a debt study can borrow a lot less.