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The global financial developments are also affecting the Dutch housing market: this week, interest rates hit the 4% mark. The rise seems to be the highest for short-term loans, with increases of 0.4 to 0.7 percentage point at a time. This is unusual, as short-term and medium-term interest rates are usually lower than long-term rates.
In July and August, there was still a small decrease in mortgage interest rates, but this is now no longer the case. The increases are caused by recent developments on the capital market, such as the large interest rate hikes by the Fed and ECB. Developments of the rates on the capital market often serve as an indicator for the mortgage interest rates.
As medium-term mortgage rates (5 and 10 years fixed) are rising faster than long-term mortgage rates (20 and 30 years fixed), the difference between the two is becoming smaller and smaller. If the short-term rates were to rise above long-term rates, this would indicate an impending recession: lenders foresee more risk in the short term than in the long term, which is why they charge a higher rate for short-term loans.
Source: Real Estate News
September 29, 2022