Dutch Banks' Share of Home-Loan Market Dropped to Record in 2015

Dutch banks’ share of the nation’s mortgage market dropped to a record low last year as home buyers turned to funds backed by institutional investors.

Rabobank, ING Groep NV and ABN Amro Group NV’s home loans business fell by a combined 3.3 percentage points to 52.3 percent of the Dutch market, while the share of mortgages originated by funds for institutional investors grew 5.7 percentage points to 22 percent, according to a report by research firm IG&H Consulting BV.

Closely held Dutch Mortgage Funding Co., Quion Groep BV and Dynamic Credit BV are attracting customers with lower-cost deals on flexible loans that can be paid down without penalty. Meanwhile, banks are reducing the amount of home and business loans on their books in preparation for tougher European capital rules.

“Pension funds and other investors are desperately looking for interesting investments with a sizable return in the current low-interest environment,” said Michiel Elich, a partner at IG&H. “The funds facilitate that by acting as an intermediary between investors and consumers, receiving money from investors and offering loans at competitive rates.”

Stichting Pensioenfonds Zorg en Welzijn, which has 161 billion euros ($180 billion) under management, is among pension funds backing the mortgage companies, along with the retirement fund for metal and steel workers.

Property sales in the Netherlands are forecast to grow 5 percent this year, according to ABN Amro, while IG&H estimates that as much as 70 billion euros of home loans will be issued, up from 62 billion euros in 2015. The Dutch residential mortgage-backed securities market is the largest in Europe and has the lowest delinquency rate, according to a Feb. 3 report by Moody’s Investors Service.

“With the banks retreating in quite large volumes, a supply shortage arises, and new parties enter the market,” said Jeroen van Hessen, managing partner at Dutch Mortgage Funding Co., which has invested more than 3 billion euros in originating mortgages for Dutch pension funds since starting in 2014. “The banks should embrace us because we help them deleverage.”

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