Dutch homes worth twice as much as total mortgage debt

The overall mortgage debt in the Netherlands amounted to nearly 670 billion euro at the end of 2011. At 111 percent of the gross domestic product, it is the highest mortgage debt in the eurozone. On the other hand, the value of all own homes is twice the amount of the this debt. Moreover, households can lay claim to savings and pension entitlements that by far exceed the mortgage debt.

Mortgage debt, house value, savings and pension entitlements, 31 December 2011

In 2011, total long-term borrowing by households was 3.8 times the amount in 1996. The value of the stock of own homes was 3.2 times as high. At the end of 2011, the value of own homes (including land) was nearly 1.4 trillion euro. In spite of the recent fall in house prices, the total value of dwellings is still more than twice as high as the total mortgage debt. For many individual households, however, the value of their home is less than the mortgage they have taken out on it.

House and land value of households

Large savings amounts counter to mortgage debt

Opposite the mortgage debt, households also have a lot of money in savings. In some cases, this money is reserved for repayment at the end of the term of the mortgage loan. These ‘endowment mortgages’ do not exist in countries where mortgage interest is not tax deductible. As a result, the relative mortgage debt is smaller in these countries, but there is no corresponding savings deposit, a fact that is often not taken into account in international comparisons of mortgage debts.

The total balance of  savings and other deposits of Dutch households (there are no separate figures for endowment deposits) equalled 332 billion euro at the end of 2011. This is nearly half of the total mortgage debt. Savings balances have been rising at a relatively faster rate than the mortgage debt since 2008.

Substantial pension reserves

In addition to payments into savings and other deposits, Dutch households have also saved relatively large amounts for their pensions. At the end of 2011, the total pension nest egg amounted to  1,140 billion euro, nearly twice the amount of the mortgage debt. Although many other countries have a smaller total mortgage debt, they also have smaller pension reserves. Obviously, this does not eliminate the mortgage debt, as this money is reserved for pensioners and future pensioners, regardless of their debt situation. But it does qualify the positions of Dutch households in terms of their wealth. And coverage ratios are still lower than advisable.

Pension reserves in Europe, 2010

Frank Notten