The low mortgage interest rate is pleasant for anyone who can refinance their mortgage, but it poses a credit risk for first-time buyers and therefore also for banks.

Supervisor De Nederlandsche Bank (DNB) calls the high debt burden that arises among home buyers a "major vulnerability" if house prices fall.

The housing market remains overheated and the sharp price increases are putting further pressure on the affordability of owner-occupied homes, especially for first-time buyers, DNB analyses.

"Despite the low interest rates, financing costs have steadily increased," the bank writes in response to questions from

"For first-time buyers and younger homeowners, the financing burden of an average owner-occupied home is now comparable to the level of just before the previous housing market crisis. And the greater the pressure on the affordability of owner-occupied homes, the more credit risk banks run."

Low interest rates are the main cause of the huge price increases in the past quarter.

With an increase of almost 20 percent in one year, the average price of existing homes exceeded 4 tons, according to figures from real estate association NVM.

Mortgage interest rates have remained virtually unchanged on average in recent months.

"There are mortgage lenders that have raised or lowered the interest rate, but the changes were always such small changes that the average mortgage interest rate has hardly changed," says Amanda Bulthuis of comparison site

“Mortgage lenders opt for a lower margin to maintain their position in the market.”

Amanda Bulthuis,

The reason is that the European Central Bank (ECB) keeps interest rates low, but also that small increases in interest rates on the capital market have not been passed on to consumers. That would be due to the fierce competition between lenders, all of whom are looking to make a profit on their capital, and real estate is a popular place to park money. "As a result, mortgage lenders make less profit on their mortgages. They therefore opt for a lower margin to maintain their position in the market," says Bulthuis.

De Nederlandsche Bank has previously noted that margins for banks and other mortgage lenders are under pressure.

It is therefore not the first time that DNB has warned against the risks of low mortgage interest rates and the high debt burden indirectly caused by this.

Since January 1, banks have been obliged to maintain larger buffers in case house prices start to fall.

View the current mortgage interest rates at Independer

Home buyers are also taking more risks

The overheating in the housing market would also encourage buyers to take more and more risks.

First-time buyers, in particular, borrow maximum from their income and they again more often opt for an interest-only mortgage.

Because they repay less quickly, they are more vulnerable to a negative price correction, DNB analyzes.

To prevent major problems, the Netherlands should give home buyers less tax advantage, DNB president Klaas Knot has repeatedly informed Dutch politicians. Faster construction of homes is also mentioned as an option in response to questions from, but a significant decrease in the housing shortage in the past year has had little effect.

According to Bulthuis, interest rates could go either way in the coming months.

"We expect interest rates to rise if the corona measures are further relaxed, people start spending more money and capital market interest rates also rise with inflation. Mortgage lenders will have to raise their rates. The risk premium may also increase if governments stop their support programs. and certain companies fall over anyway, but of course we don't know if and when that will happen."

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