Many lenders are increasing mortgage interest rates again

Many lenders started to raise interest rates on mortgages last week, and more rate increases are also coming this week, according to lending expert De Hypotheekshop. Last week marked the first time since the end of October that banks and other mortgage providers increased interest rates more often than they decreased them.

Many lenders are increasing interest rates because interest rates on the capital market have also risen. Despite many mortgage providers borrow money on the capital markets, De Hypotheekshop signaled surprise that mortgage interest rates have not risen very much. Financiers now earn very low margins on mortgage interest. The average margin in this quarter is even one of the lowest since 2008.

According to De Hypotheekshop, the fact that margins for lenders are lower is due to "intense" competition between financiers, which means that they are accepting lower earnings. The number of mortgage applications may be approximately one-fifth higher this quarter than in the last three months of last year, but the number of new customers for mortgage providers is limited.

According to the mortgage advisor, more than half of the people who applied for a mortgage stayed with their current financier and therefore the number of new customers is limited. This concerns homeowners who take their current mortgage with them to their next home, or homeowners who increase their mortgage.

"This means that 40 active financiers are competing against each other for the remaining 46 percent of potential customers (first-time home buyers, others relocating, refinancers)," wrote De Hypotheekshop. Large banks may be able to force more competition leveraging the significant profits they earned last year, the advisor said.

De Hypotheekshop announced last month that mortgage rates were starting to rise again after falling for 12 weeks in a row. The increase was because interest rates on the capital market had already been factored in. In the previous period, mortgage interest rates continued to decline due to falling interest rates on the capital market.