Consultation on new proposals for consumer protection in mortgages

The AFM has developed new proposals for the provision of mortgage credit. The AFM considers these necessary to protect consumers against excessive payment risks when financing their homes. Under the proposal, the current income norm (the Code of Conduct for Mortgage Finance, or Gedragscode Hypothecaire Financieringen) will be adjusted. The plans also include a new debt guideline, whereby mortgage advice will also take into account the maximum desirable ratio between the debt and the value of the property concerned.

This is laid down in the consultation document ‘Testing framework for provision of mortgage credit’ published by the AFM. All interested parties are invited to give their opinion of the proposals over the next six weeks, by e-mail to  The AFM will establish the definitive means testing framework taking account of the responses to the consultation document.

The AFM considers it necessary to establish new guidelines in view of excessive credit being extended in recent years and the developments in the housing market. Debts that exceed the value of the property, particularly when housing prices are falling, run the risk of a residual debt in the event of (forced) sale of the house.

The new debt guideline takes a maximum debt level of 100% of the purchase value of the property as its basis. Exceptions are possible if for example there are other assets, when renovation will increase the value of the property or if a mortgage is low in comparison to the norm for income. A mortgage with a National Mortgage Guarantee (Nationale Hypotheekgarantie) may also exceed 100%.

In the light of the vulnerable state of the housing market, the AFM is proposes a transitional measure. This means that more than 100% of the purchase value can be lent, if the excess is repaid within five to seven years. This measure will be evaluated after two years.

The existing income norm based on the GHF needs improvement on certain points according to the AFM proposals. The composition of the household needs to be taken into account (whether there are children or not), and the current explain provisions will be limited to four specific situations.

The AFM further proposes for consumer credit to include the cost of the mortgage no longer as the actual cost, but as if it were repaid in equal annual instalments, as is the case with the GHF norm. This will mitigate the risk that consumer credit in combination with a mortgage can also lead to excessive debt levels.

Advice to consumers
The AFM's proposals will apply to new mortgages. However existing mortgages can also run the risk of residual debt, especially in the case of interest-only mortgages. Consumers with an existing mortgage will be advised to consider whether in the light of their current situation steps should be taken, such as additional repayments in the case of a debt which is higher than the value of their home.

The AFM has prepared an interactive check list for consumers who intend to take out or refinance a mortgage which can be used to check whether their mortgage adviser has discussed all necessary considerations. The check list does not give an evaluation of the mortgage advice provided. The likelihood that the advice is correct increases with the quality of the advice process. The check list is available in Dutch only at

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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