First-time buyers' higher lending capacity largely canceled out by rising home prices

First-time home buyers in the Netherlands can borrow considerably more than last year. A couple both earning an average income can borrow almost 50,000 euros more. But this improvement is largely canceled out by home prices, which have also risen sharply, De Telegraaf reported based on figures from De Hypotheker.

In January, buyers in the age group 25-35 took out an average mortgage of 365,000 euros for purchasing a home, 12 percent more than a year ago. The mortgage chain attributed the increase to rising wages and falling mortgage interest rates. But it added that this additional lending capacity is offset by home prices, which increased by 9 percent in the past year.

First-time buyers benefit from an increase in the National Mortgage Guarantee limit, which rose from 435,000 to 450,000 euros on January 1. The limit for the transfer tax exemption for first-time buyers also increased from 510,000 to 525,000 euros. And young buyers are taking advantage of this, Mark de Rijke of De Hypotheker told the newspaper. “The number of young buyers up to 35 years old increased by 29% in January compared to a year ago. Of those young buyers, over 70% are first-timers.”

First-time buyers are also benefiting from landlords selling off rental properties when their tenants leave due to rent regulation and an increased tax burden. These homes often go to first-time buyers, De Rijke said.

The number of mortgage applications was 26% higher in January than a year earlier, including a 13 percent increase in mortgages for purchasing a home. “The rest of the applications were mainly for renovations, slightly less for sustainability. You can see that the enthusiasm for sustainability has decreased somewhat due to uncertainty about government policy for heat pumps and solar panels.”