Home run: national mortgage guarantee to rise in 2021

House prices might be rising, but the recent Dutch budget contained several important measures to broaden access to the housing market. Expat Mortgages founder and partner Henk Jansen explains why the NHG increase is positive news. 

From next year, the NHG National Mortgage Guarantee will increase to ensure that people buying homes worth up to 325.000 euros aren’t saddled with debt if things go wrong and they cannot sell their house for the price they paid.

This guarantee, provided by a government-backed foundation to the banks that lend mortgages on qualifying homes, is an important and unique failsafe in the Netherlands. Household debts, loans and private securities add up to a hefty 103% of the country’s GDP, according to International Monetary Fund data, but the NHG is currently guaranteeing Dutch mortgages worth a total of 202 billion euros.

Positive news

Across the Netherlands, the average Dutch home currently costs a little over 336.000 euros (although that won’t buy you many square metres in somewhere like Amsterdam); still, Henk Jansen says the NHG increase is positive news.

“The NHG is important, although not a lot of houses in metropolitan areas qualify for this price range below 310.000 euros in 2020, or 325.000 euros in 2021,” he says. “I still think it is good. It gives the bank extra security and the homebuyer a (much) lower interest rate.”

Around one in 20 of Jansen’s clients qualifies for the NHG – which is increased by 6% if the buyer wants to fund energy-saving home improvements such as increased insulation. Jansen estimates that about 30% of the country’s total mortgage applications make use of the guarantee, and NHG figures show that it granted the security to 66.300 people in the first half of 2020 (a rise on last year, including people refinancing their homes).

Essentially, the NHG helps ensure that if people cannot pay their mortgages because they have lost their job, they have a disability that prevents them from working, or a relationship ends or a partner dies, the fund steps in to provide a safety net. Mortgages under the guarantee are also tested against criteria from the National Institute for Family Finance Information (NIBUD) to ensure people aren’t borrowing more than they can afford in the first place.

Together with plans to increase the stamp duty transfer tax for investors from 6% to 8% and create a zero-rate for first-time buyers between 18 and 35, the NHG increase is aimed at making it possible for more people to buy a home.

Keeping your eyes peeled

The latest figures from Statistics Netherlands (CBS) show that house prices were on average 8.2% higher this August than in August 2019, and that fewer houses are on the market. But, according to Jansen, if you keep your eyes peeled and are ready to move fast, this is still a good time to buy in the Netherlands.

“Last but not least: interest rates are dropping lower and lower,” Jansen says. “This will also have a positive effect, giving people more borrowing capacity and lower monthly costs.”

The Expat Mortgages team consists of experienced independent mortgage advisors, located in Amsterdam, Haarlem, Rotterdam, Utrecht, Eindhoven and The Hague, specialising in helping expats navigate home buying in the Netherlands.