Inflation is so high that if mortgage interest rates and income stay the same, most households will be able to take out less mortgage money in 2023 than they did this year. But if we take into account the expected increase in wages, the situation may improve. Moreover, the government plans to make three significant changes to mortgage lending standards for 2023-2024.
Minister's position
Minister of Housing and Spatial Planning Hugo de Jonge informed parliament on updating mortgage lending standards. According to him: “Most households will be able to borrow a little more next year to buy a home with a mortgage. This is mainly due to expected wage increases and purchasing power stabilization measures taken by the government. It is important that people can buy housing that best suits their desires and personal situation. At the same time, households should have enough money left over for other expenses, such as buying groceries every day and paying utility bills. Renewing lending standards every year is a good system to keep homebuyers from borrowing too much and then being able to pay off their mortgages.”
The ratio of income and payments on mortgages
If we take into account salary increase by 3,7%expected by the Central Planning Bureau (Centraal Planbureau, CPB) and a fixed interest rate, most households will be able to borrow a little more next year. Without wage increases, the solvency of all households will fall. Changes in the interest rate also affect the amount of the mortgage loan. Interest rates on mortgage loans increased sharply last year, which negatively affected the maximum amount of a mortgage loan.
Example 1: A family with two incomes, where both partners have an income of 40.000 euros per year, can take out a maximum mortgage of 429.000 euros at an interest rate of 1,75% - and only €393.000 at an interest rate of 4,25%. This is an 8% decrease.
Note! As usual, the government has set lending standards for 2023 based on independent advice from the National Institute for Budget Information (Nationaal Instituut voor Budgetvoorlichting, Nibud).
Representatives of Nibud, in their recommendations on lending standards, emphasized that mortgage payments should not put households in a difficult financial situation. Households should have enough funds in the monthly budget for essential expenses. Due to rising food and energy prices household budget for mortgage payments will decrease, however, in the event of a 3,7% increase in wages, despite inflation, households will be able to receive more funds from the mortgage.
Complete family income statement
From 2023, when determining the maximum mortgage for partners with two incomes, the second income will be taken into account in full. This innovation is in line with the Nibud recommendations. This year, only 90% of the second income is taken into account. Households with two incomes will be able to borrow about 3200 euros morethan when the second income is 90% included.
Example 2. From January 1, 2023, families with two incomes, for example, 30.000 euros each, can take out the same mortgage as a household with one income of €60.000.
student debt
In 2024, the government intends to switch to a new method for assessing the impact of student debt on the solvency of former students. Critical when applying for a mortgage will be the current status of student debt. This should give former students who have made additional payments more opportunities to get a mortgage loan.
Nibud found that the current scoring method only gives an accurate picture of the monthly costs associated with a student loan if the former student has made no payments in addition to the regular payments. But in situations where additional student loan payments have been made, the current method may result in an unnecessary restriction on obtaining a mortgage.
Differentiation of housing by energy consumption
From 2024, the government plans to take into account the different energy consumption of housing more when determining the maximum mortgage. Borrowers will be able to get a mortgage in a larger amount:
- when buying housing with low energy consumption;
- in the case of taking measures to improve energy efficiency by the homebuyer.
Monthly energy costs for such a buyer will be relatively low. Nibud recommends that the government carefully consider several points regarding the use of energy labels.
And we remind: Mortgage borrowers can count on a tax deduction - hypotheekrenteaftrek. Moreover, you can receive a monthly mortgage interest refund by requesting an advance calculation (voorlopige aanslag) from the tax office. If you want to know more about this, then you here, and if you need help with submitting a request, we offer the appropriate service.
Publication Date: 14.11.2022
