Raiffeisen Bank limits interest-only mortgage loans under regulatory pressure
Rabobank, the largest mortgage lender in the Netherlands, announced that it will limit the percentage of new loans that can be taken as interest-only loans to 30%, down from 50%, with a maximum of €150,000 per loan starting from mid-May.
This change means that properties valued up to 500,000 euros can include a component of interest-only loans for both Raiffeisen Bank and Obvion loans. The bank stated that this adjustment would have a minimal impact on first-time buyers, as currently less than 1% choose interest-only loans.
The new rules primarily affect current homeowners who have interest-only loans and wish to move or obtain a new loan, as they will now be assessed according to stricter criteria. Interest-only loans currently account for about 45% of the total mortgage debt in the Netherlands.
This step came after warnings from the Dutch central bank and the Financial Markets Authority (AFM – Autoriteit Financiële Markten), where the authorities stated that interest-only partial loans pose risks to borrowers, who may face significant debts at the end of the loan period, as well as to lenders.
Other Dutch banks have not announced similar changes. ABN Amro declined to comment on future policies, while ING continues to allow a 50% rate. Unlike linear or installment loans, interest-only loans do not qualify for a tax exemption, which is an additional consideration for borrowers.