Dutch Mortgage Interest Rates in 2022

There are many factors to take into consideration when gathering your documents and discussing your finances with your mortgage adviser. Unfortunately, market and mortgage interest are included in the list of things you need to think about. This article will help you navigate some of the changes coming to mortgage interest in 2022.

Mortgage interest predictions

With a new year, an ever-changing market, and (finally) a new cabinet in place, Dutch mortgage holders aren’t wrong to expect an increase in the average interest rate on mortgages. Van Bruggen predicted 3 possible scenarios we could expect:

The first and most likely prediction was that we’d see an average increase of 0.2 to 0.4%. If the economy remains on its steady growth trend and the strong competition in the mortgage market, homebuyers and owners could expect to see an equal increase in market and mortgage interest rates. As predicted, we saw mortgage interest prices jump 0.25 to 0.35% in February (depending on the mortgage's fixed-rate period, of course) with the expectation that the increases would continue as the year continues.

The second prediction was that we'd see a larger jump in mortgage interest rates, between 0.5 and 1%. Despite the pandemic, we’ve already seen a huge 6% inflation rate across the world. The normal yearly average is about 2%! The European Central Bank insists this is a temporary rise in inflation, but the Dutch Central Bank expects the market inflation rate to stay above 2% for a longer period. When the inflation rate is structurally higher, (mortgage) interest rates were predicted to eventually increase to match, though such a steep increase wasn’t expected to happen in Europe quite yet. However, we did indeed see more record-breaking highs as the days and weeks passed. Van Brugge's latest report shows an increase of 1% or more for nearly all types of mortgages. Below is a comparison between the average mortgage interest rate between February and today based on Van Brugge's reports:

1.1% increase in 5-year fixed-rate mortgage interest between February (1.57%) and April (2.67%). 

1.2% increase in 10-year fixed-rate mortgage interest between February (1.69%) and April (2.89%).

1.25% increase in 20-year fixed-rate mortgage interest between February (2.10%) and April (3.35%). 

1.24% increase in 30-year fixed-rate mortgage interest between February (2.27%) and April (3.51%). 

The final and least likely prediction is that mortgage interest rates will stay the same or fall by up to 0.2%. With a hot real estate market and even hotter mortgage competition with the lowest margins we’ve seen in over a decade, the current situation proves that this prediction did not come true.

Mortgage interest deductible

For 2021, the highest mortgage interest deductible was 43%. As of 2022, this is decreasing to 40%, and further down to only 37% in 2022.

This is a change that makes a difference for people whose income falls in the highest income tax bracket, with an annual income above € 69.399. So above € 69.399, you’re paying 49,5% income tax on every euro more you make, but you can only deduct your mortgage interest at the new 40% rate.

Getting a mortgage and thinking about interest rates doesn’t have to cause you a headache. Arjen will help you understand both the market and your personal situation so that you’re more at ease with the purchase of a new property. Ready to explore your finances with an expat mortgage expert? Contact Arjen today!