Nearly 1 million households face higher mortgages: DNB

Some 950,000 Dutch households will pay more for their mortgage in the next two years when their fixed interest rate runs out, the central bank DNB said on Thursday.

For the typical household, the monthly bill will go up by around €150 before tax relief. A quarter of the group will pay less than €50 extra, but for another quarter the rise will top €300.

Most Dutch homeowners fix their rate for at least 10 years, and many signed up when rates were at record lows. Five years ago the average rate on a new mortgage was 1.6%, now it is close to 4%.

DNB’s figures cover people with a variable rate or a fixed rate that ends before the end of 2028. They account for 19% of the mortgage debt held by banks.

The central bank said most of them should be able to cope, because wages have gone up sharply in recent years and mortgages are smaller compared with incomes and house values. The typical household will spend 24% of its net income on the mortgage, up from 20%.

But the number of households spending more than 40% of their income on their mortgage is expected to double to around 60,000. The OECD and the ECB see 40% as a sign that a household could run into financial trouble.

People who face a big rise in payments just as their income drops, because they lose their job or retire, are most at risk, DNB said.

More people will be hit after 2028. The rate on another 27% of bank mortgage debt is due to reset between 2029 and 2033.