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Dutch Mortgage Interest Rates. Where there’s a will there’s a way

For the first time in 10 years, typical mortgage interest rates are above 4%. But for house hunters, it could still be a good time to buy and you can still get a preferential deal.

In 2021 and some of 2022, Dutch mortgage rates were at unprecedentedly low levels, around 1.5%. This was related to economic stimulus around the world to repair the effects of the corona pandemic but had a large impact on house prices.
Although the number of sales trended downwards, prices rose in a bubble – as you can see if you look at the past 10 years. But there’s good news for house buyers: according to the latest figures from Statistics Netherlands, the average price has now fallen 10% back since the peak of August 2022.

According to some predictions, house prices may recover somewhat in 2024, and there is still a housing shortage. Depending on your situation, buying can be a lot cheaper than renting.

Lower mortgage rates

Meanwhile, there may be a way to get a lower mortgage rate than the typical rate of around 4.5%.

“If you have had a mortgage in the past with a lower interest rate than 4.5% and are thinking of buying a new house, then in many cases, it is possible to bring your old mortgage rate with you to the new house!” points out Henk Jansen, founder of Expat Mortgages.”

So, for example, if you bought a property for €400,000 in 2019, with an annuity-based mortgage of €400,000 and 20 year fixed rate of 1.7% interest, and you want to move up to a larger home, it could be beneficial to use this option. If your new house costs €650,000 and you make €525,000 on the sale, you are left with a mortgage of €355,000 (having paid off some of the capital).

If you put all of your profit into the new house, you can potentially bring this old mortgage forward towards your new purchase for the same 1.7% rate, while adding another mortgage for €125,000, fixed for 10 years at a 4.5% interest rate. This makes the new house much more affordable.

Sell on the mortgage

In addition, if you are selling your house, some banks will allow the buyer to take on your old mortgage, which may have a preferential rate. This is of interest to the seller if they are moving abroad and would intend to pay off the loan and offers the buyer a better rate.

There are some indications that in some places, house prices are not slumping, adds Kenneth Leenders, chief executive of Expat Mortgages. Although overall house prices fell quarter on quarter this year, the Amsterdam estate agents organisation MVA has seen some signs of monthly growth in corner and detached house prices, for instance.

“Fewer houses are for sale than the demand,” said Kenneth. “We expect houses may increase in value, while it’s less likely that the supply shoots up. New build projects are having difficulties, and the expectations for 2024 are not too rosy. Supply and demand could be even further apart next year. So the right time to buy is really now!”

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