Nowhere in Europe do house owners have so few problems with paying their mortgage as in the Netherlands. Only 4% of Dutch homeowners say they have trouble with the monthly expenses. In the rest of Europe, these percentages are much higher, according to research by ING Economic Bureau.
Relatively strict income standards apply in the Netherlands. On the basis of the gross income, it is determined how high the monthly expenses may be. The risk that home buyers get into trouble is limited. People usually get into trouble only when their income falls significantly, for example due to the loss of a job or a divorce. Three quarters of Dutch home buyers expect house prices to rise further this year. Around 10% think that house prices will never fall again.
On average, almost 20% of homeowners in Europe have trouble paying the mortgage. In Germany there are 1 in 9 homeowners and in Belgium 1 in 6.
Most homeowners in Europe think that house prices in their neighborhood are going to rise in the coming 12 months. Only British and Italians are slightly less positive. This is not surprising given the current price developments in those countries: price increases in the United Kingdom are diminishing, while house prices in Italy have not increased at all in the last year.
In contrast to the Netherlands, the Belgians have not seen strong house price decreases in the recent crisis. This also applies to the Germans, although fewer homeowners believe that house prices never drop. Our eastern neighbors had a long period before the financial crisis in which house prices barely rose, so they may now be more cautious in their statements than the Belgians.
House price increases are not favorable for future starters in the housing market. After all, they have to save or borrow more money. People who already own a house become richer on paper. They may also be able to negotiate lower interest rates, as their mortgage debt decreases relative to the value of the home. Yet price increases do not automatically turn out to be favorable for them.
Homeowners with flow-through plans see their next home – which usually lies in a higher segment – often also rise in price. The absolute price increase of that property is usually larger than the book profit on the current home. As a result, people moving house often have to transfer or finance more capital than with constant house prices. Groups that profit from house price increases are, for example, drop-outs, such as older people who sell their owner-occupied home to rent. Also for owners who rent out their property and future heirs of the elderly with owner-occupied housing, price increases are often good news.
European homeowners are generally happier with their living situation than tenants. 78% of European owners are satisfied with how and where they live, compared to 59% of tenants. Dutch owners are the most positive of all: as many as 90% of them indicate that they are happy with their living situation.
Exploratory mortgage interview
Are you still satisfied with your current mortgage? Does the fixed-rate period of your mortgage expire within 3 years and do you still want to benefit from the low mortgage interest rates? Or do you just want to know your options? Consumind Finance arranges an introductory mortgage interview with an independent mortgage adviser in your area.