Abstract:
The Netherlands mortgage market has performed quite well over the years. Studies show that the debt-to-income ratio (average) in the country is 225%. This figure is one of the highest recorded in the world as of August, 2007. Despite this scenario, a sound gross domestic product or GDP should suffice to escalate the price of houses in the country.
Netherlands mortgage market offers fixed rates pertaining to mortgage loans, which account for 85% of the mortgages in the country. Trends indicate that owing to the fixed mortgage rates of interest, majority of the households in the country were impacted. In the year 2005, about 50% of the mortgage loans offered were either floating mortgage loans or fixed mortgage loans, which were extended for a period of five years. Approximately, 10% of the Netherlands mortgage loans had a tenure of 10 years or more.
The housing sector in Netherlands has flourished considerably over the years. The growth has remained sustainable. Reports suggest that price of property in Netherlands, in the year 2006 increased by 4.91 percent, which in real terms was 2.7%.
This followed a growth by 4.23% hike in the year 2005. It is being ascertained that property prices are yet to increase gently. The cost of houses has escalated by 291% in the last 21 years, which in real terms was an increase by 158%. It increased to €235,000 in the year 2006 from €60,000 in the year 1985. With regard to property owned by foreigners, no restrictions are imposed as such.
Even though, there have been escalations in the Netherlands mortgage interest rates, mortgage loans with five year duration or more have dropped to 4.77% in the year 2007 from 5.23% in the year 2003. However, mortgage loans having a term of one year to five years have increased rates of interest, which was found to be 4.74% in the month of March (2007) as compared to 3.88% during the same month in the year 2006. As far as floating rates of interest are concerned, they have increased even further.