Homeowners Face Rising Monthly Mortgage Payments
Homeowners with mortgages taken over the past decade are seeing their monthly payments increase as their fixed-rate periods end amidst recent interest rate hikes. However, the impact is less harsh than expected due to increased mortgage tax deductions.
Interest Rate Changes and Effects
Between 2016 and 2021, mortgage interest rates were historically low. Since then, the average ten-year mortgage rate without the National Mortgage Guarantee (NHG) has surged by over 3 percentage points, from 1.05% to 4.07%.
During the low-rate period, about 16% of mortgages had fixed rates lasting up to ten years, according to De Hypotheker.
Impact on Different Mortgage Types
De Hypotheker analyzed various scenarios, revealing that homeowners with partly interest-only mortgages are most affected by the rate increases.
- For example, a couple who took a 450,000-euro mortgage at 2.4% fixed for ten years in 2016, including 200,000 euros interest-only, now faces an additional 206 euros per month at the current 4.05% rate.
- Without the increased mortgage interest deduction, their payment increase would have been 430 euros monthly.
“The impact of the higher interest rates on households seems generally manageable,” said Mark de Rijke, commercial director at De Hypotheker.
Summary: Although fixed-rate mortgage expirations raise monthly costs, tax deductions help homeowners manage the increased burden more comfortably.