Homeowners Face Higher Monthly Payments as Fixed-Rate Mortgages Expire
Many homeowners with mortgages taken out in the past decade are now facing higher monthly payments as their fixed-rate periods come to an end, a trend linked to recent interest rate hikes.
According to the Dutch mortgage advisor De Hypotheker, the actual impact is somewhat milder than feared because increased rates also enhance the value of mortgage tax deductions. Between 2016 and 2021, interest rates were historically low, encouraging borrowers to secure fixed-rate loans.
Since that period, the average ten-year mortgage rate without the National Mortgage Guarantee (NHG) has climbed by more than three percentage points—from 1.05 to 4.07 percent. De Hypotheker reports that around 16 percent of mortgages during those low-rate years were fixed for up to ten years.
The firm’s simulations indicate that borrowers with partially interest-only loans face the steepest increases.
For instance, a couple who in 2016 took out a 450,000-euro mortgage at 2.4 percent, with 200,000 euros on an interest-only basis and fixed for ten years, would now pay about 206 euros more per month at an average rate of 4.05 percent. Without the benefit of mortgage tax deductions, the rise could have reached roughly 430 euros monthly.
De Hypotheker’s commercial director, Mark de Rijke, summarized that the effects of higher interest rates on most households appear to be largely manageable.
Author’s Summary:
Rising interest rates are gradually lifting mortgage costs for Dutch homeowners, though tax deductions are softening the overall financial impact.