National Mortgage Guarantee (NHG) Limit Raised!

Exactly one year ago we reported great news that from 2022, the upper limit for the purchase of housing with a national mortgage guarantee NHG (Nationale Hypotheek Garantie) will increase from 325.000 euros to 355.000 euros. And now we can please you with the fact that from 2023 this limit will increase even more - up to 405.000 euros.

What is a National Mortgage Guarantee?

NHG (Nationale Hypotheek Guarantee) - this is, in fact, the insurance that the state takes on. With NHG, homebuyers with mortgages are well protected from the unexpected: for example, in situations where a home has to be sold due to job loss, death of a partner, disability, divorce, and so on. Under NHG, the government will take over the remaining debt and pay it back to the bank.

Note! To use NHG, a one-time fee of 0,6% must be paid from the price of the property - a guarantee fee. However, on the other hand, in the presence of NHG, the risk for the bank is reduced, and therefore lower mortgage interest. As a result, monthly mortgage payments are slightly lower than non-NHG mortgages. For mortgage banks with NHG in priority: for example, we recently wrote about launching a mortgage lending program with NHG neobank Bunq.

NHG and housing prices in the Netherlands

According to Carla Muters, program manager for NHG, raising the cap on home purchases is a necessary step. “People are taking on higher and higher mortgages due to soaring house prices. We want to lend a helping hand if mortgage borrowers find themselves in difficult life circumstances, such as disability, divorce, or other issues that make housing costs unsustainable.”

Note! The average selling price of a house in the previous quarter was 425.000 euros. Thus, the new NHG limit is closer to this average price. The NHG limit is calculated according to a fixed method and does not rise as fast as house prices sometimes do. On the other hand, when prices fall, the NHG cap can still be relatively high relative to them.

NHG and affordable housing

The government plans to build 2030 houses and apartments by 900.000, two-thirds of which are in the affordable housing category. Thus far, the ceiling for affordable housing (betaalbaarheidsgrens) and the upper limit of NHG have been the same, amounting to 350.000 euros.

However, since 2023, these two indicators are decoupled from each other. The government's message says: “Because of the NHG limit skyrocketing, houses with this price are available to fewer people because incomes have risen less than the NHG limit.”. Housing Minister Hugo de Jonge talks about keeping the “availability limit” at 355.000 euros. Therefore, it does not increase with increasing NHG.

The Homeowners Association Wanted More

In July, representatives of the Homeowners' Association (Vereniging Eigen Huis) appealed to the government to increase the NHG limit to 440.000 euros next year. This would bring the NHG limit closer to the average home sale price, which was 448.000 euros last quarter. For 355.000 euros and less, there are only a few houses for sale. Without NHG, it is extremely difficult for buyers to buy their first home.

However, the NHG limit is adjusted annually according to the established system. According to this system, in 2023 the limit was supposed to be about 390.000 euros, so the new figures are already slightly higher than expected from preliminary calculations. The government is not ready to move away from the system of fixed payments, especially since housing prices are rapidly fall. As a result, from January 1, 2023, the NHG limit will increase by 50.000 euros.

Publication Date: 21.10.2022