New rules will tighten up mortgages

The financial services sector watchdog AFM is to tighten up the rules governing mortgages, the Financieele Dagblad reports on Tuesday, quoting AFM chairman Hans Hoogervoorst.

The AFM, which wants the new rules to come into effect within a month, plans to end the practice of allowing people to borrow more than the value of their home. This means people will no longer be able to borrow money to pay legal fees and taxes.
And the AFM plans to sharply reduce the number of mortgages which break the 4.5 times salary rule. At the moment, mortgage lenders should only lend people a higher multiple of their salary in exceptional circumstances. But 20% of mortgages currently beat that limit.
‘But 20% is not an exception. We are going to tighten that up,’ Hoogervorst told the paper.

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