More than one million households have 'underwater' mortgages

Early 2011, 4.2 million households in the Netherlands owned the homes they lived in. In more than one million cases, the value of the house was below the fiscal mortgage debt level. Since 2008, the proportion of households with negative home equity has nearly doubled: from 13 to 25 percent.

Households with negative home equity, 1 January

Negative home equity mainly found in younger households

Nearly six in ten ‘underwater’ owner-occupied houses have owners under the age of 40. This category of home owners often purchased their houses in the period just before house prices slumped and they have paid off only a (small) part of their mortgage debt.

Among under-40 home owners, 60 percent have negative home equity and among households with main breadwinners in the age category 25–30, no less than three quarters are saddled with ‘underwater’ mortgages, but only less than 2 percent of over-65 households have negative home equity.

Households with negative home equity by age of the main breadwinner, 1 January 2011

Negative home equity highest among 25 to 35-year-old main breadwinners

The average amount of negative home equity is 13 thousand euros, but ‘underwater’ mortgages are most common in young households and, on average, they are also stuck with the highest debts. Early 2011, the average negative home equity for 25 to 35-year-old home owners was nearly 30 thousand euros, versus only one thousand euros in over-65 households.

Average negative home equity by age main breadwinner, 1 January 2011

Jack Claessen and Reinder Lok