Mortgage applications dropped by half in 4th quarter; Fewer homes sold

The total number of mortgage applications in the fourth quarter almost halved compared to the same period a year ago. Applications also fell sharply in the third quarter because mortgage interest rates rose sharply. The higher interest rates resulted in the market for refinancing mortgages virtually drying up in the last quarter of 2022, De Hypotheker reports. Statistics Netherlands also reported that fewer homes sold in the third quarter, with newly built homes particularly dropping in popularity.

According to De Hypotheker, a chain of mortgage advisers, the total number of mortgage applications fell by 45 percent last quarter. Lenders received almost 90 percent fewer requests to transfer a mortgage. Due to the sharp increase in mortgage interest, which has risen by over 3 percent since the beginning of last year, refinancing a mortgage is, in many cases, no longer an attractive option, said De Hypotheker chairman Michel van den Akker.

At the same time, the average price for an owner-occupied home fell by almost 4 percent in the fourth quarter. According to De Hypotheker, this is the first time in years that both the housing and mortgage market have cooled down.

Due to these developments, young homebuyers up to the age of 35 are increasingly gaining a foot in the door of the housing market. In this age category, there was a 9 percent increase in applications for purchasing a new home in December compared to a year earlier.

The average mortgage amount for the purchase of a home fell by 11 percent. In the fourth quarter, that amount was 298,000 euros, falling below the 300,000 euros mark for the first time in two years.

In addition, for the first time in three years, the number of mortgage applications for home improvement declined. That number decreased by 26 percent in the last quarter of 2022 compared to a year earlier. Home improvements’ share in the total number of mortgage applications remained large at over a quarter. De Hypotheker expects that many homeowners will continue to invest in making their homes more sustainable in the coming year, given the higher energy costs.

Throughout 2022, the total number of mortgage applications fell by 6 percent compared to a year earlier. Last year there was a 5 percent increase in mortgage applications for purchasing a home among young buyers. At the same time, mortgage applications for buying a home among people over 55 fell by almost a quarter.

Fewer homes sold

The number of newly built homes sold from July to September was one-third lower than a year earlier - the largest decrease since the measurement started in 2015, Statistics Netherlands (CBS) reported based on its own figures and those from the Land Registry and the European statistics agency Eurostat. The number of existing homes sold also fell.

Over 5,000 newly built owner-occupied homes were sold in the third quarter of last year. A year earlier, there were still about 8,000. At the same time, the price of a new home increased by an average of 13.7 percent in one year to almost 474,000 euros. That is less than in the second quarter of 2022 when the average price exceeded half a million for the first time.

The number of existing homes sold in the third quarter fell by 6.4 percent to over 50,000. From April to June, that decrease was still 10.2 percent. The price of an existing home rose by an average of 11.9 percent compared to a year earlier. Price increases were leveling off, CBS said. In the second quarter of last year, prices still increased by 18.4 percent on an annual basis.

There are 11 countries in the European Union where the prices of owner-occupied homes rose faster than in the Netherlands. The most significant increases were in Estonia (+24.2 percent), Hungary (21 percent), and Lithuania (19.3 percent). Home prices only decreased in Denmark.