Rising Mortgage Debt in the Netherlands

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No image availableNL Times

According to latimes.com, the Netherlands has the highest household debt levels in the Eurozone. Many Dutch bought homes as property values rose in the 1990’s and 2000’s. Their U.S. approach in tax breaks and enthusiasm of banks persuaded borrowers to get huge mortgages.

Amsterdam Homes
Trey Ratcliff (flickr)

In the last four years, the prices of homes have fallen down by around 20 percent, following the global financial crisis. The Netherlands has the highest borrowers in the Eurozone. Its household debt levels surpassed those in Spain, Greece, and Portugal. All of the country’s mortgage debt goes beyond its gross domestic product.

Most loans are interest-only mortgages promoted by willing banks who are more interested in earning large profits. Thus, homeowners owe more on their mortgages than the actual worth of their houses. The households’ inability to pay debts and the decreasing property values have negatively affected the economy through reduced expenditures.

The foreseeable increase in the housing prices and tax breaks promoted huge interest-only mortgages.