Young homeowners rather vulnerable in the Netherlands

Young homeowners rather vulnerable in the Netherlands

Young homeowners in the Netherlands have little to no equity on their home and this makes their financial position vulnerable, said De Nederlandsche Bank (DNB) Tuesday.

Although on average, prices of Dutch residential properties are considerably above the corresponding mortgage loans, there are large differences between individual households. Whereas the net wealth of senior citizens tends to be considerable, the financial position of many young homeowners is rather vulnerable. The equity on their home is often negative whereas they have little if any savings.

For households, the home tends to be the main source of both wealth and indebtedness. The debts have recently been increasing: in mid-2011, overall mortgage indebtedness ran to EUR 644 billion. Offsetting this sum is over EUR 1100 billion in home property value. The average homeowner therefore enjoys a considerable net equity on his home: over 40% of the current market value.

However, the decline in house prices of recent years has reduced the debt-to-wealth ratio.

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