January 23, 2021

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Despite major costs disappearing, we haven’t made additional mortgage repayments NOW

Despite major costs disappearing, we haven't made additional mortgage repayments NOW

Despite the partial spring lockdown and the fact that most holidays were canceled, mortgage repayments in the second quarter were not more, but less extra. The Nederlandsche Bank (DNB) reports this on Tuesday to Kup.nl.

A total of around 3.5 billion euros more was repaid in April, May and June, around 340 million euros less than in the second quarter of 2019. “Preliminary figures show that in the third quarter of 2020 the voluntary repayments were lower than in the same quarter of the previous year. “

Most of the money we didn’t spend on food and vacations ended up in consumers’ bank accounts. “On savings and current accounts,” said DNB. This includes vacation pay, which is usually credited in May or June.

According to DNB, it is noticeable that consumers with the additional money in their pockets did not decide to reduce their mortgage debt and thus also the repayment period and / or the monthly amount. “This is noteworthy because voluntary repayments are usually a substantial part of free savings.”

And those free savings were unprecedented. The free savings are all that the consumer saves, with the exception of pension accruals, which are usually not voluntary. Total free savings this year in the second quarter were EUR 12.4 billion higher than in the second quarter of 2019.

DNB: “The increase is the result of an increase in disposable income of 2.4 billion euros and a decrease in consumer spending of 10 billion euros compared to the previous year.” Disposable income includes wages, benefits, pensions, interest and dividends minus taxes and contributions.

It is possible that there will be more additional repayments on the mortgage in the last few months of the year, which is traditionally the quarter when this happens most often. In the first half of the year, consumers mainly chose to save.