The Dutch Homeowners’ Association (Vereniging Eigen Huis, VEH) today stated in various media that banks have made increasing profits on mortgages in recent months. The Homeowners’ Association bases its statement on periodic research conducted by the University of Amsterdam.
ABN AMRO does not recognise the calculations of the Homeowners’ Association and the University of Amsterdam. In the past, before the crisis, the bank reported negative margins on mortgages. This was in the period that the effective market interest rate, and therefore mortgage interest rates, were high – often 5% or more. After the crisis, the effective market interest rate declined and margins on mortgages returned to normal, healthier levels. This resulted in clearly lower mortgage interest rates for clients.
With more insurers and pension funds active in the mortgage market, competition was on the rise in 2015. Regulatory developments, such as Basel IV, are increasing the cost of capital for mortgages provided by banks. This is driving up cost prices. Basel IV will not, however, increase cost prices for insurers and pension funds. Nevertheless, the important 10-year fixed-interest rate for clients is at historically low levels.