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Mortgage Update | Insights from Q1 2023

Rising interest rates cause third consecutive decline in mortgage market

Utrecht, May 22, 2023

Mortgage sales amounted to €24 billion in the first quarter of 2023. This is a sharp decline of -40.4% compared to the same quarter in 2022. The total number of mortgages issued also fell drastically by -37.8%, reaching 73,000 mortgages. In contrast, the average mortgage loan size increased slightly by 1.0% compared to the first quarter of 2022.

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The mortgage market shrinks

The decline in mortgage sales continues in the first quarter of 2023 compared to 2022. With regards to the first quarter of 2022, there is a decrease of -40.4%. Looking at the fourth quarter of 2022, there is a decrease of -23.3%. The giant drop in mortgage sales compared to the first quarter in 2022 is at -80% and is largely driven by the steepest decline in mortgage sales among those refinancing we have observed since the IG&H Mortgage Update first launched in 2015.

"The sharp decline in sales among refinancers can be explained by the fact that in the first half of 2022, many refinancers took out their mortgages because of the low interest rates, which created a huge spike in mortgage sales within this category. The rise in interest rates began afterward creates a big contrast between these two years," said Chris van Winden, director of banking at IG&H.

The market is shrinking not only in number of sales but also in the number of mortgages closed. In the first quarter of 2023, the number of mortgages closed fell by -37.8% compared to the same quarter in 2022. This is the strongest year-on-year decline in Q1 since the start of the IG&H Mortgage Update, with the main cause being the high interest rates that allow for less financing.

The number of mortgages taken out by first-time buyers decreased by -11.6% compared to the first quarter of 2022. Among existing homeowners, there was a decline of -23.2%. The downturn observed in the mortgage market is mainly due to the dip among those refinancing, which fell by-73.8% compared to the same quarter in 2022.

"In particular, the high interest rates, resulting in a lower maximum mortgage amount to borrow, are creating uncertainty among all lender groups. As a result, fewer, lower mortgages are being taken out and fewer homes are being sold," Van Winden explains.

The average mortgage loan size increases slightly

Despite the drop in mortgage sales and the number of mortgages closed compared to the previous quarter, the average mortgage amount is up 0.3% to €387,000 from the fourth quarter in 2022.

Regiepartijen lose market share among all lender groups

While banks are regaining ground as market leaders, so-called ‘regiepartijen’ (specially set up mortgage companies) are losing market share among all lender groups. "Due to rising interest rates, preference is given to closing shorter interest periods, which is more often offered by banks than by regiepartijen. This results from the difference in financing," Van Winden describes.

Aegon is the strongest riser in terms of market share in the first quarter (+1.5 percentage points). In addition, ING and Rabobank (+1.4 percentage points and +1.2 percentage points, respectively) are among the top five risers. Mint experienced remarkable growth, going from a decline in the fourth quarter of 2022, to a +0.4 percentage point increase in the first quarter of 2023. Compared to the fourth quarter of 2022, ABN Amro continues declining (-1.8 percentage point), as does Lot Mortgages (-1.0 percentage point).

Introducing: new sustainability section in the IG&H Mortgage Update

Starting this quarter, IG&H is adding a new section to its Mortgage Update: Sustainability. This topic has been important for years but has gained even more attention recently due to increased energy prices. In addition, climate and energy targets have been set at the European level, which are being translated into European and Dutch legislation. This affects the sustainability of homes and makes the monitoring of sustainability even more important. For this reason, IG&H will from now on also report quarterly on the number and type of energy labels registered.

Would you like to know more? You can download the full mortgage update. We wish you pleasant reading and wholeheartedly invite you to respond!

Kind regards,

Chris van Winden

Director Banking

T: +31 6 29 56 52 76

Authors & data analysis of the IG&H Mortgage Update:

Matthijs Kallen

Steven Moerkens

Veerle Willemsen


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