Why increasing mortgage interest rates shouldn't scare you

Low-interest rates have benefited first-time homebuyers and homeowners looking to refinance their high-interest mortgages for a couple of years.

In recent years, housing prices have been surging, so the general sentiment was that those prices were considered abnormal. The current interest rate situation may even be advantageous for you as a first-time homebuyer, as it could initially scare off some of your competition. Current homeowners are also getting jittery and selling their homes sooner than planned. As a true Fundaholic, you probably already noticed that more properties are available.

So, what's next for you?

No more competition from less savvy buyers

As interest rates rise, prospective homebuyers could leave the market to wait for better conditions which means that savvy buyers like you have fewer competitors!

Today's interest rates are still historically low

Buying a home while mortgage interest rates are rising is nothing to worry about, and the current mortgage rate is still relatively low from a historical perspective.

For example, ten years ago, the average interest rate for first-time homebuyers was 4.53%, while in 2021, the average rate was 2.34%.

I bought my first apartment in 2013. My mortgage had an annual rate of 3.65% per year, which was even a mortgage that NHG backed. Today's best mortgage rate with NHG is 2.84%. The Dutch housing market is still a safe place.

Higher interest rates - a sign of a recovering economy

When the economy is doing well, interest rates tend to rise. Increases in mortgage interest rates indicate that buyer confidence is returning and that increasing income and a tight labour market will help promote inflation over time.

Higher mortgage rates also indicate that investors feel more comfortable withdrawing money from the safer haven of bonds and reinvesting it in riskier investments such as stocks.

Borrowing conditions

Different variables can impact your mortgage amount, not only the interest rate. Focusing only on your mortgage rate shifts your attention away from the loan's actual cost, which can be a costly mistake. The lowest interest rate does not always equate to the best loan offer. You should ask your mortgage advisor about the possibility of taking your current low-interest rates to your new home or the options around early repayments.

The situation in the Netherlands

In the first quarter of 2022, the number of mortgage applications reached a new high. Refinancing an existing mortgage led to increasing applications in the first quarter of 2022.

Despite rising mortgage rates, buying a house is still a good investment compared to renting your home. The housing market is emerging from a period of historically low-interest rates, and despite growth, it remains historically low.