Homeowners Face Increased Monthly Mortgage Payments
Homeowners with mortgages from the last decade will experience higher monthly payments as their fixed-rate terms end due to recent interest rate hikes. However, the increase is less drastic than expected because higher rates enhance mortgage tax deductions, according to De Hypotheker.
Interest Rate Trends and Effects
From 2016 to 2021, interest rates were historically low. Since then, the average ten-year mortgage rate without the National Mortgage Guarantee (NHG) rose from 1.05% to 4.07%, an increase of over 3 percentage points. Approximately 16% of mortgages during the low-rate period had fixed rates for up to ten years.
Impact on Homeowners with Interest-Only Mortgages
De Hypotheker evaluated several scenarios and found homeowners with partly interest-only mortgages face the largest payment increases. For instance, a couple who took a €450,000 mortgage in 2016 at 2.4% fixed for ten years, including €200,000 interest-only, would now pay about €206 more per month at today's average rate of 4.05%.
Thanks to the higher mortgage interest deductions, the increase is limited; without this tax advantage, their monthly payments would rise by €430.
Summary of the Situation
Overall, De Hypotheker’s commercial director, Mark de Rijke, summarizes that the effect of increased interest rates on households is generally manageable.