ING joins other banks in tightening interest-only mortgage rules in Netherlands

ING will sharply restrict interest-only mortgage options in the Netherlands starting July 23, joining earlier moves by other major lenders and intensifying a broader shift in the housing finance market driven by regulatory concern over risk.

The bank will cap interest-only mortgages at 30 percent of a home’s value. For properties worth up to 1 million euros, the maximum interest-only portion will be 150,000 euros. For homes valued up to 2 million euros, the cap rises to 250,000 euros. For properties worth 3 million euros or more, borrowers will be allowed up to 500,000 euros interest-only, the bank reported.

Existing mortgages will not be affected if they remain unchanged. However, the new limits will apply to increases, conversions into interest-only structures, and second mortgages. Customers renewing their loans may retain their existing interest-only portion, but only up to 50 percent of the home’s value.

The move follows earlier policy tightening by Rabobank, ASN Bank, and ABN AMRO, which have all adjusted their rules on interest-only lending in recent months. The changes reflect growing concern among Dutch regulators and banks about the long-term risks of these loans.

The Authority for the Financial Markets (AFM) has previously described interest-only mortgages as risky, contributing to a gradual policy shift aimed at reducing the overall share of such loans in the Netherlands.

The Dutch central bank, De Nederlandsche Bank (DNB), has also warned about the risks. If housing prices fall and homeowners are forced to move, they can be left with significant residual debt.

DNB further noted that borrowers often carry high debt for longer periods. If income drops—due to retirement or job loss, for example—mortgage payments may become unaffordable. In January, DNB said nearly 45 percent of Dutch mortgage debt is interest-only and urged banks to closely monitor associated risks.