The mortgage market in the Netherlands

Article provided by Expat Mortgages, an IN Amsterdam partner

Taking out a mortgage in the Netherlands

In autumn 2024, average house prices in the Netherlands were at their highest-ever levels. Nevertheless, compared to recent years it has become easier to secure a mortgage, with trends suggesting an improvement in market sentiment. Interest rates have eased slightly, settling between 3.5% and 4%. This has helped restore the market, particularly amongst doorstroomers – people moving to a larger home – and first-time buyers.

It was a different story in 2022, when the Dutch mortgage market faced significant challenges as interest rates shot up. To keep economies going during the coronavirus pandemic, the European Central Bank (ECB) had dropped bank interest rates to below zero and mortgage rates hit an unusual low. This stimulated unprecedented price rises.

But in 2022, interest rates for 10-year fixed mortgages – one of the most popular options among homebuyers in the Netherlands – trebled to around 4% on average. As a result, only 462,000 people took on a mortgage: a drop of more than a tenth. Although rates stabilised at 4%-5% in 2023, the number of mortgages taken out dropped by almost a third, one of the steepest declines since the financial crisis. Even though property prices dropped slightly that year, affordability was a significant problem.

Expected recovery

As market conditions improve and transactions increase, the numbers of mortgages taken out this year are expected to partially recover from 2023 levels. When it comes to interest rates, there is a cautious optimism that they may decrease even further, depending on inflation and the actions of the ECB. However, it’s worth noting that the bank aims to avoid returning to the ultra-low rates of previous years.

Some mortgages that are available now have priced in expected slight cuts in interest rates, but there may be better ones on offer next year. If you’re taking out a mortgage, you could consider splitting it: this means fixing one portion for 10 years and taking a one-year fixed rate on the other portion. This option is worth considering if you think that there will be better deals available in 2025.

Preparation is key

For internationals who want to buy a home in the Netherlands, thorough preparation is key. Have a meeting with a mortgage broker before you start looking for a property, so that you have all the proper documents in place and know what you can afford. Consider the option of a secured bidding plan, a type of insurance that some mortgage brokers – including Expat Mortgages – offer to give the seller of a property a guarantee that you are eligible for the necessary loan. This means you can bid on a property without risking losing your 10% deposit. And think about using an independent broker, who isn’t linked to one bank, but can search a variety of mortgage providers to ensure you get the deal that best fits your circumstances. Whether you use a bank’s own mortgage advisors or an independent broker, you will need to pay a fee for arranging the mortgage.

Think about timing

Is it a good time to buy? After all, property prices are at their highest-ever average, and the official property values (WOZ waardes) are likely to fall next year, because they will reflect the market trend in 2023.

However, if you take expert advice and find the right property, buying can still be a good move for you. As ever, this depends on your personal circumstances and current living arrangements. If, for example, you are presently staying in an expensive rental property, it might be in your best financial interests to pay for a mortgage instead. If you are planning to stay in the Netherlands for a minimum of three to five years, it’s certainly worth considering buying a property. And for many, it’s also a way to make the Netherlands feel like your home.

Expat Mortgages specialise in helping internationals navigate the mortgage market in the Netherlands. Make an appointment for a free consultation or join a webinar or seminar to find out more.