Dutch Banks tougher on mortgages

The Dutch banks have tightened the standards for approval of residential mortgages in the first quarter.

That reported De Nederlandsche Bank (DNB) on Tuesday based on the results of their latest bank research, the so called Bank lending survey.

In their comments on this tightening of mortgage standards, net 60% of banks in the Netherlands say that they see more risks with respect to the outlook for the housing market. Banks further state that they have changed the conditions for the approval of mortgage loans, for example through a small rise of the margins on risky mortgage loans and slightly tougher collateral requirements in the first quarter.

As for the past three years, banks note that demand for residential mortgages continued to decline in the first three months of this year. Net one third of banks indicated this. Most banks in their explanations point to the outlook for the housing market and consumer confidence.

The survey data are in line with mortgage growth, which has halved since 2008 (March 2011 3.3% compared to a year earlier) and reflect the strongly cooled-off housing market.

Dutch Banks have become a bit more flexible in providing loans to businesses according to the researchers. But this is especially true for large enterprises, according to the Bank Lending Survey on the first quarter of 2011.

The relaxation comes against the backdrop of a declining but still moderately positive growth of corporate lending, as indicated by the banks in the survey. The same picture emerges from the latest data on the development of lending (an increase in March by 2.1% compared to the previous year; see the link below to the chart on corporate lending).

For the first time since the crisis in 2007, a majority of banks have seen an increase in the demand for corporate loans. In the first quarter, net 14% of banks indicated this, but the spread in answers is large. Banks report that the increase in demand is especially coming from large enterprises. Most banks have not yet noticed an increase in the demand for loans from small and medium-sized enterprises.

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