The increased interest rates have added to this pressure. The average ten-year fixed mortgage rate increased from around 1.5% in 2021 to roughly 3.8% in 2025. While rates have stabilised over the past year, they remain well above the levels seen during the low-rate period. For new buyers, this directly translates into higher monthly mortgage payments for the same loan amount. The effect is particularly significant for first-time buyers, who must purchase at current price levels and do not benefit from earlier gains in house prices.
Structural supply constraints reinforce these financial dynamics. New construction has lagged behind demographic demand for more than a decade, while higher construction, tax and maintenance costs have increased the overall cost of housing. Because substitute options are limited, these conditions sustain upward price pressure even when the pace of price growth moderates.
Demographic shifts have also played a role. The share of single-person households has continued to rise, meaning that housing costs are more often carried by one income rather than two. This structurally increases the average share of income spent on housing, even if prices and mortgage rates were to stabilise. In urban regions, where competition for centrally located homes is strongest, this effect is particularly pronounced.
Policy and lending developments have further influenced affordability. The gradual reduction of mortgage interest deductibility has raised net housing costs, especially for higher-income households. At the same time, lending rules have expanded borrowing capacity. Since 2023, the National Institute for Budget Information (Nibud), which sets the annual mortgage lending standards, allows 100 percent of the second income to be included in borrowing capacity. Buyers of energy-efficient properties may also borrow additional amounts depending on the home’s energy label, with top-ups of up to €50,000.
These measures were intended to improve access to home ownership and support the energy transition. However, in a market with persistent supply shortages, they have primarily translated into higher bidding capacity rather than improved affordability. Many households use the additional borrowing room simply to remain competitive. For a typical buyer, these rule changes can add roughly €70 to €110 per month in housing expenses. The effect is most visible among first-time buyers and single-income households, who frequently borrow close to their maximum capacity when entering the market.
Current situation
The share of net income spent on housing now exceeds its post-crisis peak. While household incomes have grown in recent years, this has not been enough to offset the rise in house prices and the higher financing costs faced by new buyers. First-time buyers and single-income households are most affected, as they typically enter the market at current price levels with little or no accumulated housing equity.
Calcasa’s data indicates that affordability pressure has returned to levels comparable to those observed during the 2008 crisis. Although real wages have improved modestly as wage growth has outpaced inflation, this has only partially softened the increase in monthly housing costs, leaving households with a smaller share of income available for other spending.
Despite the deterioration in affordability, mortgage payment behaviour remains strong. Payment arrears are very low by international standards, supported by stable employment, accumulated savings buffers and prudent lending practices. Within the DMFCO portfolio, the share of loans with arrears longer than three months remains extremely low (around 0.01 to 0.025%). More broadly, the Netherlands has one of the lowest mortgage arrears rates in Europe, reflecting both strong household payment discipline and conservative underwriting. Rising house prices have also helped maintain solid equity cushions, keeping average loan-to-value ratios moderate and expected credit losses limited.
Outlook
Looking ahead to 2026, developments in income, interest rates and house prices will determine whether the affordability ratio stabilises or continues to rise. In a baseline scenario where mortgage rates remain around current levels, real wage growth stays modestly positive and house price growth slows, the share of income spent on housing could ease slightly. A more pronounced fall in mortgage rates would expand borrowing capacity, but in a constrained market this would likely translate into renewed price increases rather than lasting affordability gains. Conversely, if mortgage rates rise again or wage growth weakens, housing costs will absorb an even larger share of household income.
Across all scenarios, the structural shortage of housing supply remains the decisive constraint. Without a sustained increase in new homes in the lower and mid-price segments, affordability will remain the main barrier to market access. For investors and lenders, the Dutch housing market continues to show resilience, but that resilience operates within the limits of affordability. As Calcasa notes, the affordability ratio is unlikely to improve materially until the imbalance between income growth, financing costs and supply is resolved.
Future policy decisions by the new government may influence affordability over the medium term. Discussions on the pace of further mortgage interest deduction reform and the level of support for new housing development could shift the balance between disposable income and housing costs. However, any impact is likely to be gradual, as both fiscal adjustments and new construction programmes require multiple years to materialise. As a result, the short-term affordability outlook will remain primarily driven by income growth, interest rates and the persistent housing shortage.
In addition to these economic drivers, lending conditions themselves will shift in the period ahead. From 2026, mortgage lending standards will tighten slightly, reducing borrowing capacity for many households. For a typical dual-income household, the reduction is estimated at around €5,000–€8,000, while the impact is larger for single buyers on average incomes. For households with a gross income of around €65,000, the decrease in maximum borrowing capacity may be closer to €13,000, reflecting the larger relative effect of the new income-to-expense thresholds at this level. This adjustment is expected to reinforce existing affordability pressures, particularly for first-time and single-income households trying to enter the market.
