Homeowners Face Higher Monthly Payments as Fixed-Rate Mortgages Expire
Homeowners who secured mortgages during the past decade are experiencing increased monthly payments as their fixed-rate terms come to an end, driven by recent interest rate hikes. However, De Hypotheker indicates that the impact is less severe than expected because higher rates also enhance mortgage tax deductions.
Interest Rate Trends and Mortgage Impact
Between 2016 and 2021, interest rates were unusually low. Since then, the average ten-year mortgage rate without the National Mortgage Guarantee (NHG) has risen sharply, increasing by over 3 percentage points—from 1.05% to 4.07%. During the period of low rates, about 16% of mortgages were taken with fixed rates lasting up to ten years, according to the advisory firm.
Effects on Different Mortgage Types
De Hypotheker’s analysis highlights that homeowners with partially interest-only mortgages face the greatest impact. For instance, a couple who in 2016 took out a €450,000 mortgage at 2.4% interest for ten years, including €200,000 interest-only, would now see their monthly payment increase by €206 at the current average rate of 4.05%.
Thanks to higher mortgage interest deductions, the increase is limited; without this tax advantage, their monthly payments would rise by €430.
Overall Assessment
"The impact of the higher interest rates on households seems generally manageable," summarizes Mark de Rijke, commercial director at De Hypotheker.
Higher interest rates are pushing up monthly mortgage payments as fixed-rate terms expire, but increased tax deductions help ease the financial burden for many borrowers.
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