Allowing homebuyers in the Netherlands to borrow more money would drive house prices even higher and increase financial risks — particularly for first-time buyers. That is the central finding of a new annual monitor published by De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM) at the request of the Ministry of Finance.
The report examines the current state of mortgage loan standards in the Netherlands and assesses what would happen if those standards were relaxed. The conclusions are clear: easing borrowing rules is not the answer to the country’s tight housing market.
What Are the Current Borrowing Standards?
Dutch mortgage lending is governed by two key limits. The first is the Loan-to-Value (LTV) ratio, which caps how much a buyer can borrow relative to the value of a property. Currently, borrowers may not take out a mortgage exceeding 100% of the property’s value. The second is the Loan-to-Income (LTI) ratio, which ties the maximum loan amount to the borrower’s income and the prevailing interest rate.
These rules were introduced in 2013 with the goal of preventing households from taking on unsustainable debt levels. Since then, the maximum LTV has been gradually reduced from 106% to its current 100% cap.
Key Figures From the New Monitor
The DNB and AFM monitor paints a picture of a housing market under significant pressure. Among the most notable findings:
- House prices have risen by 21% since mid-2023, while incomes grew by only 14% over the same period.
- Nearly 75% of homes sold in 2025 went for above the asking price.
- The Netherlands’ total mortgage debt stands at just under 80% of GDP — well above the eurozone average of approximately 50%.
- More than half of first-time buyers have a mortgage exceeding 90% of their property’s value.
- First-time buyers use an average of 92% of their borrowing capacity, compared to 83% for existing homeowners remortgaging or moving.
- Interest-only mortgages are declining but still account for nearly 40% of total mortgage debt.
These figures highlight the financial vulnerability of many buyers, especially those entering the market for the first time. Using a mortgage calculator can help prospective buyers understand how much they can realistically afford before committing to a purchase.
Why Loosening Borrowing Rules Would Backfire
At first glance, allowing buyers to borrow more might seem like a practical solution to the affordability crisis. In practice, however, the regulators argue the opposite would occur.
When buyers gain access to larger loans, they tend to bid higher on properties. This increased purchasing power does not translate into greater affordability — it simply inflates prices further. The result is a cycle in which higher borrowing limits lead to higher prices, which in turn require even larger loans.
First-time buyers are already borrowing close to their maximum limits. If those limits were raised, their debt levels would increase accordingly, leaving them more exposed to financial shocks such as job loss, rising interest rates, or a fall in property values. Banks and other mortgage lenders would also face greater risk as a consequence.
Should Rules Be Tightened Instead?
The monitor does not advocate for stricter rules either. While tighter lending standards would reduce systemic financial risk, they would make it even harder for first-time buyers to get onto the property ladder. The report does suggest that an LTV cap below 100% could be a sensible long-term goal — but only if the rental market is sufficiently large and affordable to accommodate those who cannot yet buy. This would give younger households the opportunity to save while renting before purchasing a home.
A Broader Approach Is Needed
DNB and AFM argue that no single adjustment to borrowing rules — whether looser or stricter — will resolve the structural problems in the Dutch housing market. Instead, they call for a comprehensive policy response.
Key recommendations include:
- Phasing out tax advantages for owner-occupied homes. The Netherlands has long offered significant fiscal incentives for homeownership, including mortgage interest deductibility. Reducing these benefits could help cool demand and limit debt accumulation.
- Expanding housing supply. Building more homes remains one of the most effective ways to ease price pressure. Without a meaningful increase in supply, demand-side measures will have limited impact.
Together, these measures could help contain the growth of household debt and reduce vulnerabilities for both buyers and financial institutions.
The Broader Context of Dutch Household Debt
The Netherlands has one of the highest levels of mortgage debt relative to GDP in the developed world. Despite improvements since 2013 — fewer homes are now in negative equity, and debt-to-income ratios have improved — Dutch households remain significantly more indebted than their European counterparts.
A large share of that debt is also on interest-only terms, meaning many homeowners are not reducing their principal balance over time. This structural feature of the Dutch loan market adds an additional layer of long-term financial risk.
The new annual monitor is intended to provide policymakers, regulators, and the public with a clearer picture of these dynamics on a regular basis. DNB and AFM say they will continue to update the report each year to track developments in lending standards and financial stability.
