Dutch banks set stricter loan and mortgage conditions for buyers
Dutch banks and lenders have tightened the conditions set to apply for loans and mortgages to buy property, according to a survey by The Dutch Bank (De Nederlandsche Bank; DNB)
Applying for loans in the Netherlands
DNB has reported that these changes are an attempt to prepare for the consequences of the coronavirus crisis and the likely economic recession. In an effort to save jobs and prevent bankruptcies, Dutch banks and lenders have implemented these changes for the second quarter to ensure that customers can repay loans. This move will make it harder for people in the Netherlands to buy homes.
While evidence from the survey proves that it has been made harder to apply for loans and mortgages, there is no indication of the extent to which criteria have been tightened, or how banks have carried it out. Banks may now have stricter requirements for income or will have increased interest rates for loans.
The study also found that the majority of banks have tightened criteria for applications for all types of corporate loans as well.
Mortgage lenders have seen an increase in the number of mortgage applications in the past few months, also as a result of the coronavirus crisis. However, banks report that the number of applications for residential mortgages levelled off the second quarter of this year. They also expect the demand for residential mortgages to decline drastically in the third quarter.
Requirements set for mortgage loans have become increasingly relaxed over the past three years, but this did not continue into the second quarter of 2020. The criteria set for successful mortgage applications have also become more strict, and interest rates are on the rise.
Most banks in the Netherlands expect these new criteria to be further tightened in the coming months.