Mortgage interest rate rise does not continue after Lagarde’s soothing words

In October, several banks, including Rabobank, raised mortgage interest rates. The fear of a further increase caused a huge boom in mortgage applications, says Martin Hagedoorn, product manager at De Hypotheekshop.

A lot of requests

“The week of 11 and 18 October is even in the top 5 with the highest number of applications since 2011. About 15,000 applications per week, from all lenders combined. Normally there are about 10,000 per week,” says Hagedoorn.

This concerns applications for the purchase of a house, but also for renovations and transferring a mortgage.

Fear of higher interest rates

The Dutch were afraid that interest would rise. “It is always difficult to predict what the interest rate will do, it depends so much on investor sentiment and the policy of the central banks. At the time, they expected the central banks to phase out the purchase policy. Combined with inflation, this caused expectation for an interest rate hike,” explains Hagedoorn.

After ECB President Christine Lagarde announced in a speech that there were no plans yet to wind down the ECB’s stimulus program, the market became calm again. Lagarde reiterated today that “unnecessary” easing of aid measures “will represent an unjust headwind for the recovery.”

Impact of Lagarde

“Those words had a lot of impact, we are now in calmer waters, although there are still more applications than average,” says Hagedoorn.

The interest rate is now at 1.48 percent, an average that the mortgage broker calculates based on the interest rates of mortgages from different providers and with different maturities. “This keeps the record low from September (1.42 percent) in sight,” concludes Hagedoorn.

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