Buying a home "historically" expensive for first-time buyers: ING

First-time buyers have rarely spent such a large part of their disposable income on purchasing a home as they do now, ING reports. The bank, which speaks of “historically poor affordability,” expects that buying a home will remain expensive for first-time buyers in the coming year.

Since the end of 2022, first-time buyers have spent an estimated 30 percent of their disposable income on mortgage payments in the first year after purchasing their home. That is considerably more than the long-term average, which ING estimates at around 25 percent.

The bank attributes the poor affordability to the increase in net mortgage payments. This was approximately equal to the rise in the disposable income of first-time buyers, which means that affordability did not improve during 2024.

The main cause of the increased mortgage payments is the sharply increased home prices. As a result, first-time buyers have to take out a higher mortgage. According to Statistics Netherlands (CBS), home prices reached a record again at the end of last year, with the average home costing over 483,000 euros.

ING expects the affordability of owner-occupied homes to remain “very unfavorable” this year. Although disposable income will increase in 2025, the net mortgage payments for purchasing a home will also rise. ING also believes that there is a chance that mortgage rates with a long fixed-rate period will remain at approximately the same level.

According to the bank, the combination of these developments leaves “little room to improve the affordability of owner-occupied homes.”