EXCLUSIVE: Tony Ward to launch insurance product in the Netherlands
Tony Ward of Home Funding is launching a mortgage insurance product in the Netherlands this year to sit alongside a government-backed scheme already in the country.
The National Mortgage Guarantee, also known as NHG, provides a safety net for borrowers if they lose their job, their relationship ends, they become disabled for work, or their partner dies.
If they are forced to sell their home and can’t cover their mortgage the NHG will prevent them from falling into debt.
However, the scheme is only available on mortgages worth up to €265,000 (£235,000) – which is one reason why Ward and Home Funding will step in with a private alternative in partnership with a new lender.
The plan is to launch the insurance product between the end of Q2 and the start of Q3 2018.
Ward, chief executive of consultancy firm Home Funding, said: “It will be a structured risk insurance policy as a substitute for the Dutch government policy – nobody is doing it at the moment.
“I see great opportunities in a market that has that many similarities to the UK in terms of the types of product, types of housing problems, how they fund their loans and how they distribute their loans.”
The Netherlands has something of a regional divide, which is why a guarantee for homes with higher house prices could be in demand.
While the average house price in the country was €263,000 (£234,000) at the end of 2017 based on Statistics Netherlands data, there are hotspots.
Prices are higher in the likes of Utrecht, The Hague and Amsterdam – in a situation comparable to London and the South East in the UK.
Ward, who has met senior government officials in the Dutch housing ministry, has been told the market will grow by €200bn in the next three to five years from €650bn of mortgage debt, which is where it stood as of Q3 2017 based on Aegon Asset Management data.
The government expects new lenders to fill this gap.
The Dutch housing market seems to be growing, as economists at Rabobank have predicted house prices increasing by 8% in 2018.
They rose by 7.6% last year, with growth in Amsterdam standing at 10.7%.
Meanwhile in the fourth quarter of 2017 66,000 Dutch homes changed hands, more than any other quarter on record according to government figures.
Unlike in the UK, where the government is cracking down on buy-to-let, it is just emerging in the Netherlands, with more lenders getting on board.
Michel van der Sluis, partner at The Dutch Mortgage Consultants in Utrecht, said: “The buy-to-let market in the UK is massive already; the buy-to-let market in the Netherlands is following the same trend.
“We have a shortage of housing at the moment. The interest rates are very low and until now it wasn’t an option if you were a consumer to do a buy-to-let and get a mortgage with a regular mortgage lender.
“We work with a lot of lenders in the Netherlands and almost everyone is trying to develop a buy-to-let product – it could be huge next year.
“The entirety of the Netherlands is rising but Amsterdam, Utrecht and The Hague are almost overheating.
“2016 and 2017 was nuts for Amsterdam and I think it’s going to be massive in 2018.”
He reckoned the UK mortgage market is three to five years ahead of the market in the Netherlands legislation wise.
The government in the Netherlands is said to be keeping an eye on the buy-to-let market but haven’t chosen to dampen it down with tax measures thus far, as is the case in the UK.
Van der Sluis is optimistic about the insurance product coming to market similar to the National Mortgage Guarantee, or NHG.
For those buying properties under €265,000 (£235,000) between 2012 and 2016 in the Netherlands 74% took out products with that guarantee, so it seems likely a similar product could gain traction.
Van der Sluis said: “There will definitely be an interest.
“If you live in Utrecht you can’t find a house below the €265,000 limit.
“If you are a lender the NHG is quite difficult because they have to meet separate underwriting criteria, which can be quite expensive.
“Amsterdam, Utrecht and The Hague should be logical places to start but there’s no reason why you shouldn’t broaden its reach to other areas with lower prices.”
Tony Ward departed as chief executive of Clayton Euro Risk in December 2017 and is an experienced banking chairman and CEO.