In the first ‘corona year’, the number of mortgage applications rose by almost 10 percent compared to the same period a year earlier. Homeowners in particular have been active in the housing market since the beginning of the crisis: the number of refinancings increased by 20 percent between April 2020 and March 2021 compared to the same period in the previous year. The number of mortgage applications for the improvement of the home also rose sharply in the ‘corona year’: by 41 percent compared to the same period a year earlier.
The corona crisis has resulted in an exceptional increase in the number of mortgage applications. “Homeowners are still very active in the housing market, especially when it comes to refinancing the mortgage or improving their own home,” says Willem-Jan Koudijs, franchisee of De Hypotheker in Utrecht. “Our research shows that many Dutch people are afraid that the ‘housing bubble’ will burst again within a few years. At the same time, only one in five Dutch people think that the financial consequences of the corona crisis have an impact on their own living situation or mortgage. It therefore seems that the enormous increase in the number of mortgage applications can be partly explained by the fact that many homeowners have secured their own (financial) situation in the uncertain ‘corona year’, especially when the mortgage interest rate seemed to be rising. Now that they have secured a low mortgage interest rate for a longer period of time through a refinancing and / or have renovated their house, they are confident about their own future. ”
Renovation and sustainable housing very popular in Corona year
In the corona year, one in five mortgage applications came from refinancers. In the second quarter – just after the outbreak of the corona crisis – there was even an explosive increase (+175 percent) in the number of refinancers, who still wanted to take advantage of the historically low interest rates. Although the fall in mortgage interest rates started again in July, significantly more refinancers (+33 percent) were active in the third quarter of 2020 compared to the same period the year before. Another important cause of the strong growth (+41 percent) in the number of mortgage applications is the number of homeowners who decided to renovate or make their homes more sustainable. Due to the sharp rise in house prices and the enormous scarcity of affordable homes, they decided to invest in their own home, especially to create more space and increase living comfort. The strongest growth can be seen in the age category 25 to 35 years (+54 percent) and 35 to 45 years (+53 percent).
When it comes specifically to the number of applications for the purchase of a home, the largest increase in the first ‘corona year’ is visible among young home buyers up to the age of 35 (+17 percent): more than one in three of the applications for the purchase of a house came from this group. The average mortgage amount for this age category rose by 11 percent and now amounts to 277,000 euros. However, rising house prices are not making it any easier for this group of homebuyers, where the urgency is greatest. The fear that the financial consequences of the corona crisis will affect their own home or mortgage is therefore greater among Dutch people up to the age of 35: almost three in ten (28 percent) are afraid of this.
Housing market less and less accessible without own money or equity
Despite the high activity in the mortgage market in the corona year, more and more potential home buyers are sidelined, says Koudijs. “As a result of the soaring house prices and the housing shortage, it is almost impossible to get an affordable home. The average sales price in the first quarter of 2021 rose by almost 15 percent compared to the same quarter in 2020. This is causing a lot of uncertainty, especially among starters. Many existing homeowners currently have considerable equity on their homes and are not so concerned about the financial consequences of the crisis on their housing situation. However, young home buyers and owners are quite anxious about their own living situation and their future prospects. For this group, the collapse of a ‘housing bubble’ – which 62 percent of the Dutch currently fear – could have major consequences if their mortgage is flooded. The housing market is thus becoming less and less accessible to home buyers, unless they have a lot of their own money or equity. This disturbing development requires a structural and urgent approach. ”
Three out of five Dutch people expect that the ‘housing bubble’ will collapse in a number of years
Source link Three out of five Dutch people expect that the ‘housing bubble’ will collapse in a number of years