2019 – Q2 | Further mortgage market shrinkage in the second quarter of 2019

By Banking, Hypotheekupdate, News

Mortgage revenue (-9.1%) and the number of mortgages sold (-12.5%) fell sharply

Compared to the same period last year, mortgage revenue fell by 12.5 percent in the second quarter of 2019, as consultancy firm IG&H’s Mortgage Update points out. Since the average mortgage loan only grows to a limited extent, mortgage revenue is also considerably lower than a year ago (-9.1 percent). As a result, this is the third consecutive quarter in which the mortgage market is shrinking on an annual basis.

In the past quarter, the average mortgage loan rose to a record amount of 317,000 euros – only a slight increase (+0.5 percent) compared to the first quarter of 2019 and a clear indication that growth of the mortgage loan is decreasing.

“There are signs across the board that the trend of strong growth in the mortgage market, which has persisted for years, seems to be broken,” says Joppe Smit, who works at consultancy and implementation firm IG&H. “This is the third consecutive quarter in which we observe shrinkage on an annual basis, although the second quarter of 2019 was better than the first three months of the year. Record year 2018 seems to remain unparalleled, which will put an end to the consecutive growth of the past five years.”

Mortgage refinancers grow increasingly important
Most mortgages (more than 31,000) are still taken out by existing homeowners. This is an 8-percent increase compared to the previous quarter. Mortgage refinancers show the strongest quarterly growth with 13 percent. “The number of mortgage refinancers continues to grow,” says Smit. “Mortgage lenders and consultants that specifically target this group can take advantage of this. On the other hand, it makes banks with large mortgage portfolios vulnerable. They will need to do more to retain these customers.”

Mortgage is one click away with an app
A notable trend in the mortgage market is the growing interest of banks and insurers in simplifying mortgage applications. The market is in the early stages of a digital data transition. “Right now, it’s not yet possible to take out a new mortgage on the sole basis of digital data,” says Smit. “Several sources with reliable and verified data have now been unlocked, but the number of sources should be increased. In addition, mortgage lenders should adjust their processes and systems in such a way that digital applications can also be processed immediately. It’s simply a matter of time before we can submit a complete mortgage application with a few clicks.”

IG&H is one of the initiators of ‘Handig!’ (Handy!). The purpose of this partnership between HDN, ING, NHG, Florius, ABN Amro, Rabobank, De Hypotheker, and IG&H is to make the process of applying for a mortgage as fast and complete as possible based on digital, validated source data. “We see that more and more parties are exploring digital possibilities,” says Smit. “DUO, for example, experiments with possibilities to make government data easier to share, but other parts of the government also follow these developments with interest. Developments will accelerate once they get on board, too.”

Sincerely,

Joppe Smit
Director at IG&H
E: joppe.smit@igh.com T: 0031 6 2035 2438

IG&H Mortgage Update – authors & data analysis:
Niels Roelofs (niels.roelofs@igh.com); Sophie Dijkkamp (sophie.dijkkamp@igh.com)

Considerable shrinkage in mortgage market in the first quarter of 2019

By Banking, Hypotheekupdate, News

The amount of mortgages issued fell sharply in the first three months of 2019. According to consultancy firm IG&H’s mortgage update, it was the number of first-time and existing homeowners in particular that dropped significantly. “Currently, we also observe a considerable decrease in the number of mortgage refinancers. In 2018, this group was still responsible for the growth of the mortgage market,” says IG&H’s Joppe Smit.

Click here to read the full report (in Dutch).

The average mortgage loan was €316,000 in the first quarter of this year – a 5.2-percent increase compared to the same period last year. This growth is mainly due to the sharp rise in mortgage loans for mortgage refinancers. In the purchasing market, the average mortgage loan remains virtually constant.

Mortgage revenue is shrinking

In the first quarter of 2019, the total mortgage revenue was nearly €22 billion – a 9.6-percent shrinkage compared to the first quarter of 2018, and the largest since 2013. Compared to Q4 2018, the decrease was as high as 22.8%. In previous years, the usual decrease in Q1 was partly due to a reduction in the maximum loan-to-value on the annual limit and the additional growth in the fourth quarter, which compensated for this.

This year, neither of these developments is perceived. “The sharp decline we currently observe is truly a deviation from the trend after years of growth,” says Smit. “Both the relatively limited housing supply and the difficult position of first-time homeowners are to blame for it.”

Growth in large banks’ share

The banks’ share increased by 2 percentage points to 64.1 percent. This growth mainly comes from the three large banks, which saw their combined market share rise by 1.3 percentage points to 51.3 percent. Investment funds enabling non-bank lending also saw their share grow – by 1 percentage point to 18.3 percent.