Mortgage refinancing in the Netherlands increases by 63 percent

The low interest rates in the Netherlands have led to a 63 percent increase in the refinancing of mortgages on the Dutch housing market compared to a year earlier.

People who bought a new home are choosing longer fixed rate periods than before.

De Hypotheker real estate company compared numbers from the last quarter of 2015 to the same period in the previous year.

According to the Hypotheek Index, 64 percent of home buyers chose a fixed interest rate period of 11 to 20 years, which is an increase of 28 percent.

The fixed interest rate period of six to 10 years was the most popular until recently in the Netherlands, but the number of people opting for it decreased by more than 50 percent in a year.

Refinancing mortgages

For home owners it can be an appealing option to refinance their mortgage to get a lower interest rate, if the fixed rate period of the existing mortgage is set to expire within two years.

The reason is that the penalty owed to the current mortgage provider will no longer be as high.

Despite having to pay a significant fee to the current lender, the lower interest rate decreases the monthly payment which translates to savings in the long term.

Fixed interest rates

There are two main reasons for home buyers choosing longer periods for a fixed interest rate.

The obvious one is that it can mean long-term savings due to the current low interest rate.

The second reason is that the difference between interest rates of shorter and longer fixed periods has become much smaller. That also makes it more appealing to opt for a longer fixed rate.

Increased consumer choice

The increased number of mortgage lenders and real estate agents on the Dutch housing market also provides consumers with more choice.

This gives potential home buyers more options when they are looking for financially appealing mortgages.