Tuesday 05 July 2022

Housing newsletter: rising interest rates and rural retreats


A round-up of the latest housing news, brought to you by Expat Mortgages.

Interest rates

Interest rates have more than doubled since the start of the year and you will now pay around 3.5% for a 10-year fixed rate mortgage. Economists expect rates will go up even more, given inflation is hovering around 8%, thanks to a wide variety of factors.

‘The real low rates of around 1% are gone and I don’t think this is something we will ever get back,’ says Henk Jansen, founder of Expat Mortgages.

‘If you managed to fix your mortgage at a low rate like that, you are lucky. But if you look back over the years, 4% is still a great rate,’ he says. ‘Interest rates are normal now.’

And if you are in the Netherlands temporarily, says Henk, it may make sense to fix your rate for a shorter period because there is no reason to go for 10 or 20 years. ‘It may even be interesting to opt for a floating rate again, if you can afford the risk.’ Ask your mortgage advisor about the options.

To buy or rent?

House prices are continuing to rise but it is important to realise they are not only affected by interest rates, Henk points out. ‘We still have a real shortage of housing and renting is not a that attractive either,’ he says. ‘If you are here for a longer time, it is still worth investing in a house because it will keep its value.’

‘We will see fewer people who are interested in buying as prices go up – a viewing may get seven or eight people rather than 15 or more – but house prices will continue to rise,’ says Henk. ‘Buying a property is still good value for money and will be an investment in the longer term. Interest rates may have an impact, but the shortage of property will keep prices going up.’

Non-repayment mortgages

A non-repayment or interest-only mortgage could be seen as a good way of maximising your borrowing capacity – you pay off the interest but not the principal and so at the end of the mortgage term you need a lump sum to pay back the original loan.

This could be an interesting move if you are only borrowing a small amount compared with the value of your property. It may also be a useful tool if you know there is family money or an inheritance coming which can help.

‘But if you are only going for a fully or partially interest-only mortgage to keep down your monthly payments you are doing it for the wrong reason,’ says Henk. ‘And you could end up being strangled by your loan in the future.’

Country cottages

If you’ve been dreaming of moving to the countryside, new figures from estate agents’ organisation NVM show you are not alone. One in five old farmhouses which came on the market last year were snapped up by city dwellers – and that is up from one in nine five years ago.

The move has partly been triggered by the switch to working from home – which means space is at a premium. A rural retreat won’t come cheap, however. According to the NVM, the average price paid for a former farmhouse was €738,000.

Upcoming webinars

If you would like to find out more about buying a new home in the countryside, or anywhere else in the Netherlands, feel free to join one of Expat Mortgages’ upcoming housing webinars and ask your questions. The next one is scheduled for June 29. The digital doors open at 5pm. Register here.

Giving back to the community

Expat Mortgages staff are once again taking part in the annual Home Walk, Home Run and Home Ride fundraising events on June 25 and 26. No fewer than 40 of the Expat Mortgages team will be running, walking and cycling for 24 hours, in relay to raise cash for Ronald McDonald house at the Emma children’s hospital in Amsterdam. You can support the runners here.

Last year, the team raised €43,000 and the aim is to beat that this year. ‘It is part of what we should do,’ says Henk. ‘We have a privileged position as a company and it is only right that we give something back to society.’

Any questions?

If you’ve got any questions about the process of buying a home in the Netherlands, you can always check out the FAQs on the Expat Mortgages website to see if they have the answers. Drop them a line – they have an open chat line – if your question is not on board.

Thank you for donating to DutchNews.nl

The DutchNews.nl team would like to thank all the generous readers who have made a donation in recent weeks. Your financial support has helped us to expand our coverage of the coronavirus crisis into the evenings and weekends and make sure you are kept up to date with the latest developments.

DutchNews.nl has been free for 14 years, but without the financial backing of our readers, we would not be able to provide you with fair and accurate news and features about all things Dutch. Your contributions make this possible.

If you have not yet made a donation, but would like to, you can do so via Ideal, credit card or Paypal.