Mortgage interest rates rising faster than savings account rates, says central bank

Mortgage interest rates have clearly risen more than interest rates on savings accounts since the European Central Bank (ECB) started raising rates last year in its fight against inflation. Economists at De Nederlandsche Bank (DNB) asserted this while noting that interest rates on savings have actually increased "only slightly."

The Dutch central bank said it was not surprised by the development. Even with previous interest rate increases by the ECB, it took some time before that led to consumers again receiving more interest on their savings.

However, the effect of ECB policy on savings rates in the Netherlands has thus far been more limited and weaker than in other countries.

"A possible explanation for the more limited pass-through to savings interest rates in the Netherlands is that the Dutch banking sector is relatively concentrated," the DNB experts wrote in an article on the website of economics magazine ESB. "In addition, the savings from households in the Netherlands are high compared to other countries in the euro area." This means Dutch banks have less space to increase savings interest compared to other eurozone countries.

Another factor that may play a role is that interest rates on mortgages in the Netherlands have been fixed for a relatively long time. "As a result, the interest on bank loans also changes more slowly than in other countries. This may play a role in the consideration of Dutch banks to raise savings interest more slowly."

The financial comparison site Geld.nl recently noted that smaller banks in the Netherlands are increasingly raising interest rates on savings to 2 percent or more, while interest rates at the three major banks have remained relatively low. "Many people save with these banks anyway. So they do not necessarily have to offer higher interest rates to attract sufficient savings," said Amanda Bulthuis about the savings interest rates at the major banks. Bulthuis is a money and insurance expert at the comparison website.

She said she believes that the major banks have largely chosen not to raise savings interest rates because they have provided longer-term loans and mortgages at low interest rates in recent years. "Those loans are still ongoing and the banks therefore earn little from them, which means that there is also less margin to raise savings interest rates."