Housing market stalls after rapid mortgage interest rate hike

The increased mortgage interest has put the housing market at an “impasse.” Mortgage advice chain De Hypotheker reached this conclusion based on its figures on the number of mortgage applications. Many home seekers seem to be adopting a wait-and-see attitude, causing the number of relocations to drop further.

Last month, the chain had more than a quarter fewer mortgage applications to purchase a home than a month earlier. And compared to a year ago, the decrease was almost a third. The average mortgage amount increased by nearly 5 percent annually. According to De Hypotheker, people who look at the housing market seem to postpone purchasing a home until the mortgage interest rate has fallen again or the supply becomes more affordable.

House prices are still very high. And “due to the mortgage interest rate, home seekers are currently able to borrow less. This puts the affordability of homes under pressure,” explained commercial director Menno Luiten of De Hypotheker. He points out that many people want to move, but according to De Hypotheker’s research, they are looking for a home for around 349,000 euros. This while the average selling price in the second quarter was still 448,000 euros.

Recently there were also other signs that the housing market is cooling down. According to Statistics Netherlands (CBS), the increase in house prices clearly weakened in June, although the price increase was still high. Construction group Heijmans also noticed that the number of people with a specific interest per newly built home was decreasing.

Realtors’ association NVM, in turn, found that the number of houses for sale has increased considerably in recent months. But people would generally like to sell their house before buying a new home, the realtors added. That would be why the number of transactions is still lagging behind supply.

Luiten warned everyone not to cheer too early about the slightly cooling housing market, which in itself is a “healthy development.” Home prices are still rising sharply, and there are still far too few houses. “It is crucial that attention does not slacken and that housing shortages remain urgently on the agenda,” he would advise policymakers.

Analyst Oscar Noorlag of Van Bruggen Adviesgroep recently told NOS that the mortgage interest rates have stabilized, and he expects a decrease in the near future.