Size and breakdown of the mortgage market

End-2023, Dutch households collectively had over €815 billion in mortgage debt outstanding with Dutch financial institutions (Chart 1). This is about a quarter more than a decade ago. Relative to GDP (Chart 2), mortgage debt outstanding at Dutch financial institutions decreased from 100% in early 2012 to 79% end-2023. We do not collect data on residential mortgage loans of Dutch households outstanding at foreign mortgage providers.

Banks

Banks are the biggest players in the Dutch mortgage market. End-2023, they accounted for more than €566 billion in outstanding mortgage loans, or 69% of the total volume.

Bank mortgage lending increased sharply from the 1990s until the credit crisis. Besides strong income growth, some structural factors also contributed to the increase in lending during this period, such as:

• Increase in the number of households
• Increase in the number of dual earners
• Easing in credit underwriting standards
• Mortgage products that carry no or a limited repayment obligation before maturity

The growth in bank mortgage lending has been delayed since the credit crisis. Factors that have dragged growth include restrictions on tax-deductibility for new interest-only mortgage loans and the fact that capital repayment has generally become more popular among households.

Institutional investors

Another cause of the limited growth in bank mortgage lending is the fact that institutional investors – pension funds, insurers and investment funds – have been gaining market share for several years. Whereas banks were responsible for the growth in Dutch mortgage debt seen in the past few decades, most of the growth seen since 2014 is accounted for by institutional investors. End-2023, institutional investors had more than €167 billion in mortgage loans on their balance sheets (16% of GDP), making them the second largest mortgage lenders after banks.

Other financial institutions

By contrast, other financial institutions (OFIs), which largely consist of finance companies and securitisation vehicles, have seen a downward trend. The decline is related to banks securitising fewer residential mortgage loans on the one hand, and stricter accounting rules on the other, which increasingly require banks to leave securitised residential mortgage loans on their own balance sheets. As a result, they are not counted under OFIs. Higher investment in residential mortgage loans by institutional investors also contributed somewhat as they securitise fewer mortgage loans. End-2023, this left more than €83 billion in residential mortgage loans on OFIs' balance sheets, representing a decrease of more than half compared to 2012.