Mortgage rates continue to rise, putting pressure on homebuyer borrowing capacity

Average mortgage interest rates in the Netherlands are consistently breaking annual records, recently climbing to 4.5 percent. This increase is largely driven by global factors, including geopolitical tensions, rising energy costs, and concerns over mounting sovereign debt in both the United States and Europe. Financial experts note that the instability in global markets is trickling down to local lenders, creating a volatile environment for property financing. The surge in interest rates has significantly reduced the borrowing capacity of potential homebuyers, with some couples seeing their purchasing power drop by over 15,000 euros since the start of the year. This shift is cooling the housing market as higher monthly costs force some buyers to exit, leading to an increase in unsold inventory on platforms like Funda. Furthermore, the situation is complicating the housing market's circulation, as existing homeowners are discouraged from moving. Those with low interest rates are hesitant to trade them for much higher current rates, which contributes to a stagnant market and limits the available supply of homes for prospective buyers.