The legacy of interest-only mortgages: A microsimulation study of the Dutch mortgage portfolio

  • Jan Jakob Lameijer Jan Jakob Lameijer

This thesis examines the risks associated with the large share of interest-only mortgages in the Dutch mortgage portfolio. Using a novel dataset on individual loan characteristics we build a microsimulation model that simulates the mortgage debt up to thirty years in the future. By doing so, we show that voluntary repayments contribute substantially to the repayment of interest-only mortgages and that common risk triggers appear to be favorably distributed across borrowers.
Furthermore, we estimate non-housing wealth for the simulated borrowers and show that most households will not have saved enough to fully repay the mortgage at maturity. Nevertheless, we find that home equity is likely to be positive for these borrowers, such that risks associated to the banking sector are limited. Results are presented for different house price scenarios.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.

MORE ABOUT NETSPAR


Mission en strategy           •           Network           •           Organisation           •          Magazine
Board Brief            •            Actionplan 2023-2027           •           Researchagenda

ABOUT NETSPAR

Our partners

B20231704_PGIM_Blacklogo2
B20221103_Zwitserlevengrayscale
B20231704_PensioenFederatie_Blacklogo
B20231704_DNB_Blacklogo
B20160708_tilburg university
View all partners