The financial services sector watchdog AFM has added its voice to calls for changes in the mortgage tax relief system, arguing for a gradual phasing out of the tax break.

In an interview with broadcaster RTLZ, the AFM’s chief executive Ronald Gerritse said the current system contributes to the high level of private debt in the Netherlands – because the government makes it so easy and cheap to borrow money to buy a home.
A limit would be politically sensitive but the cabinet must break the taboo, Gerritse said. ‘I think it is an illusion to say that by ignoring the problem it will go away’.
The central bank and International Monetary Fund have also called for limits to the mortgage tax relief system, which is one of the most generous in Europe.
Borrowing
In the Netherlands, home owners can fully deduct all the interest paid on their mortgage from tax for 30 years. Mortgages can also be as high as 106% of the value of the property. This, say financial experts, encourages people to take out the maximum loan and make minimum repayments.
The mortgage debt in the Netherlands currently represents 128% of GDP, the central bank says.
The issue is likely to be on the table when the government decides what further cuts and economic reforms to introduce because of the rise in the budget deficit.