You’ve found the house of your dreams and you have the salary to match. But how do you go about getting a mortgage? And what do you need to know about the mortgage market right now?
Expat Mortgages is a broker that specializes in house financing for internationals in the Netherlands and knows all there is to know about tips to win a bid and raise a sensible loan.
Kenneth Leenders, chief executive, says that although house prices are at their highest ever levels on average, it has become easier to raise a mortgage right now. “The trend suggests an improvement in market sentiment,” he says. “Interest rates have eased slightly, settling between 3.5% and 4%, which has helped restore the market, particularly amongst doorstroomers – people moving to a larger home – and first-time buyers.”
It was a different story in 2022, when the Dutch mortgage market faced significant challenges as interest rates shot up. To keep economies going during the coronavirus pandemic, the European Central Bank (ECB) had dropped bank interest rates to below zero and mortgage rates hit an unusual low. This stimulated unprecedented price rises.
But in 2022, the popular 10-year fixed mortgages trebled to around 4% on average and only 462,000 people took on a mortgage – a drop of more than a tenth. Although rates stabilized in 2023 between 4% and 5%, mortgage numbers dropped by almost a third, one of the steepest declines since the financial crisis. Even though prices dropped slightly that year, affordability was a significant problem.
Recovery
“This year, I expect mortgage numbers to partially recover from 2023 levels, as market conditions improve and transaction numbers increase,” says Kenneth. “Looking ahead, when it comes to the interest rates, there is cautious optimism that rates may decrease even further, depending on inflation and the actions of the ECB. But the bank aims to avoid returning to the ultra-low rates of previous years.”
Some mortgages that are available now have priced in expected slight cuts in interest rates, but there may be better ones on offer next year.
If you’re taking a mortgage, this might mean it’s wise to consider splitting it: you could fix one portion for 10 years and take a one year fixed rate on the other, if you think that there will be better deals available in 2025.
Preparation
For internationals who want to buy a home, the key thing is preparation. Have a meeting with a mortgage broker before you start looking so that you have all of the proper documents in place and are very sure of what you can afford. Consider things like a secured bidding plan, a type of insurance that Expat Mortgages can offer to give the seller a guarantee that you should be good for the loan without you risking losing your 10% deposit. And think about using an independent broker, like Expat Mortgages, which isn’t bound to one bank but can search mortgage providers to get you the deal that best fits your circumstances.
“You are going to pay a fee for arranging the mortgage, whether you use a bank’s own mortgage advisors or an independent broker,” says Kenneth. “We are specialised in helping internationals so we understand the kinds of questions that you will have and we have experience in helping people like you navigate the complicated system.”
Timing
Is it a good time to buy? Despite the fact that house prices are at their highest ever average – and some properties have issues with their foundations or flood risk – if you take expert advice, the right property can always be a good move for you. The official house values (WOZ waardes) are likely to fall next year, because they will reflect the market trend in 2023.
“It’s always a question of: what’s the alternative?” he says. “If the alternative for you is an expensive rental property, then it might be financially in your best interests to be paying a mortgage instead of your landlord’s loan.
“If you are planning to stay in the Netherlands for three to five years, buying a property is something that we always advise considering. And it’s one way to make the Netherlands feel like your home.”