Mortgage guarantee should be limited to first time buyers

The national mortgage guarantee scheme, which pays off the debt if people default on their payments, should be limited to first-time buyers, the scheme’s organisers say in Monday’s Financieele Dagblad.

The paper says the move has the backing of the central bank and finance ministry, who are concerned about the sharp rise in guarantees and the fact the treasury will have to pick up the bill.
At the moment banks are prioritising new mortgages to homes with the guarantee – some 70% of new mortgages of up to €350,000 go to homes covered by the scheme.
‘That is not what was meant to happen,’ Karel Schiffer, of the NHG, told the paper. ‘The NHG was set up to help low income families buy a house but has exploded in popularity in recent years.’
The paper reported earlier this month that the Dutch housing market is so ‘dangerous’ that Delta Lloyd has changed its mortgage policy to focus on homes with a government guarantee.
The national mortgage guarantee was introduced in 1995 as a way to encourage home ownership and currently covers homes costing up to €350,000. The guarantee means that if people default on their mortgage, a special home-ownership fund (known as the WEW) will pay off the debt.
The number of homes changing hands fell by 14% in the first three months of this year while prices were down 6%.

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