The Dutch economy is vulnerable due to risky behavior by households and investors, De Nederlandse Bank (DNB) said on Monday.
The regulator is particularly concerned about the high mortgage debts and the ever-rising share prices.
DNB reported on the financial stability of the Dutch economy on Tuesday.
The regulator warns that our country is vulnerable, as house prices or stock prices can suddenly fall.
This is partly because the prices of owner-occupied homes are skyrocketing.
As a result, buyers have to go deeper and deeper into debt to be able to buy a house.
The amount they borrow relative to their income is increasing.
The Dutch have the second largest debt in Europe.
95 percent of that is mortgage debt.
Danes are at the top of the list.
In addition, many investors have invested in equities, among other things.
Their prices are breaking record after record.
For example, the Amsterdam stock exchange indicator AEX reached a position of more than 800 points for the first time last month.
According to DNB, investors and households seem to assume that the economic situation will remain as it is now, for example with regard to low interest rates.
But if the situation changes and as a result house prices and stock prices fall, this could lead to serious problems.
Prolonged high inflation could lead to a shock
The regulator points to unfavorable developments in this regard.
For example, there is still a risk of a new corona wave due to the delta variant, the shaky Chinese real estate giant Evergrande can cause problems in financial markets and inflation in the Netherlands is rising sharply.
The latter is partly due to high prices of natural gas and petrol.
Moreover, the rise in inflation could last for a longer period of time, thinks DNB CEO Klaas Knot.
Long-term high inflation can shock financial markets, causing share prices to fall and houses to decrease in value.
However, Knot still emphasizes that he expects inflation in the euro area to fall back to a normal level of about 2 percent next year.Keywords: