AFM: stricter standard for mortgages will improve consumer protection

The stricter standards of banks with respect to the provision of mortgages offer consumers better protection. As of 1 August, a mortgage loan will have to be more in proportion to the value of the residence. The interest-only part of the mortgage will be limited to at most 50% of the house's market value. There will, moreover, be fewer exceptions to the existing income standard. This will limit the risk of consumers winding up with an excessive residual debt. The AFM is therefore pleased with the tightening of the standards by banks, which is also endorsed by insurers.


In 2009, the AFM made proposals to adjust the provision of mortgage loans. Investigation by the supervisor showed that the existing standard left too much room for excessive mortgage loans. The risk of residual debt is also too great as loans are often higher than the purchase value of the residence. This risk is increasing because the price development in the housing market has levelled off or is even negative.

The possibility to exceed the maximum amount a consumer may borrow in exceptional cases and with proper substantiation will continue to exist. In the past, however, this possibility was often applied without justification, which meant that the existing standard led to the provision of excessive mortgage loans in practice. According to the new bank standard, a mortgage loan in excess of the income standard can only be advised under strict conditions.

An AFM investigation into mortgage advice in 2010 already showed that banks are already providing excessive mortgage loans less often, partly as a result of the economic circumstances and the attention the AFM paid to the provision of mortgage loans in recent years. The new standards will ensure that the current, more cautious practice will be continued in the long term as well.

Debt standard

In addition to the income, the amount of the mortgage loan in relation to the value of the residence will be taken into account from now on. The mortgage loan can amount to at most 110 percent (104% plus transfer tax) of the value of the house. In addition, a maximum of 50 percent of the value of the house may be financed with a mortgage in respect of which no fixed agreements have been made concerning redemption (interest-only). Until now, there was no maximum for the amount of the mortgage loan compared with the value of the residence.


The Financial Supervision Act (Wft) provides that irresponsible loans may not be provided. The AFM monitors compliance with this statutory requirement. As of 1 August, the new code will form the starting point for the supervisor to check whether banks and other mortgage providers and consultants comply with the statutory prohibition on the provision of irresponsible loans. The AFM considers the code a sound elaboration of the statutory open standard.

Advice for consumers

The AFM urgently advises consumers to make a balanced assessment of the increased risks they run when concluding a mortgage loan that is higher that the value of the residence. Mortgage advisors and providers will, in future, have to take the income and the value of residence into account when advising on a mortgage loan. They determine the maximum amount a consumer is allowed to borrow on the basis of the income and debt standard. The consumer should ask himself if he is willing to bear the costs of that maximum mortgage loan.

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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