Due to rising mortgage interest rates, first-time buyers in the housing market are losing an increasing part of their income to mortgage payments. Almost 33 percent of their disposable income goes to their mortgage. That is more than ever, say ING researchers.
Mortgage interest rates have risen sharply in the past year, from over 1 percent to over 4 percent. Incomes could not keep up with that pace. People who have bought a house before and move on to the housing market are often better off, the bank reports.
ING calculated that people who bought their first home at the end of 2022 spent an average of 32.9 percent of their disposable income on mortgage payments. That was still 27 percent a year earlier, which was also above the average of the past twenty years.
According to estimates by ING researchers, the monthly costs of first-time buyers who took out a mortgage at the end of 2022 are on average 300 euros higher than those of first-time buyers who took out a mortgage a year earlier.
In the intervening period, central banks raised their interest rates to bring inflation back down, while interest rates had been unprecedentedly low in previous years. The European Central Bank also raised its interest rate again on Thursday, from 2.5 percent to 3 percent. Ultimately, higher ECB interest rates – sometimes with a lag – also lead to higher interest rates on savings and loans.
People moving on can often take advantage of favorable interest rates
Homeowners who buy a new home are better off, because they can often take the interest from their old mortgage with them when they move on.
If their mortgage was taken out less than ten years ago, chances are their interest rate will be lower than the current one. Since 2013, the average mortgage interest rate has not been as high as it is now.
Owner-occupied homes will become more affordable for first-time buyers in the course of this year, ING expects. On the one hand, this is because house prices are falling. In addition, the Dutch have on average more to spend during the year if their wages have risen.
