DBRS Commentary: The Dutch Housing Market: Booming Amid Modest Mortgage Lending – Risks to Financial Stability Contained

DBRS Ratings Limited released a Commentary on “The Dutch Housing Market: Booming Amid Modest Mortgage Lending – Risks to Financial Stability Contained”.

House prices in the Netherlands are rising at a fast pace. Higher house prices have been favourable to date for household net wealth, as well as for mortgage lenders, covered bonds and residential mortgage-backed securities (RMBS), as higher prices have reduced indexed loan-to-values (LTVs).

Further fast growth in house prices could raise concerns about how sustained the upward trend can be; however, DBRS sees overall risks to financial stability as contained. To a large extent, higher prices reflect limited housing supply, which reduces the risk of an overall correction. Moreover, the rise in house prices is not being accompanied by a credit boom. Dutch banks have also increased their resilience in recent years and the Dutch authorities are discussing the adoption of new measures to prevent potential overheating in the Dutch housing market. DBRS expects the impact of macroprudential measures on the housing market to be gradual.

Some key highlights of DBRS commentary are:
-- Nationwide house prices have risen by 32% since 2013. Prices are now above the 2008 peak levels and rising at a stronger pace in the large Dutch cities.
-- The upward trend in house prices seems to be driven by strong demand for housing and limited housing supply.
-- However, growth in net mortgage lending is subdued, partly reflecting voluntary repayments. Bank lending has been muted and partially replaced by non-banks in recent years.
-- DBRS sees the overall risks to financial stability as contained, given the market fundamentals and ongoing regulatory measures.

The commentary on the Dutch Housing Market: Booming Amid Modest Mortgage Lending – Risks to Financial Stability Contained is available at www.dbrs.com.

For more information on the Kingdom of the Netherlands, visit www.dbrs.com or contact us at info@dbrs.com.

DBRS Ratings Limited
20 Fenchurch Street, 31st Floor, London EC3M 3BY United Kingdom
Registered and incorporated under the laws of England and Wales: Company No. 7139960