Banks obtain a significant part of their funding on the capital market and adjust their mortgage interest rates accordingly. Changes in that capital market therefore also influence the development of mortgage rates. By tracking over longer periods when (and especially how) banks respond to movements in the capital market, it becomes possible to assess quite accurately how mortgage rates are likely to develop in the short term.
As mentioned, mortgage rates partly depend on developments in capital market interest rates. The graph below illustrates this clearly. The green line shows how the capital market rate has evolved over time, and the red line shows how mortgage rates have responded to it.
However, that’s not the whole story. The mutual competition between the various (more than 40!) lenders in the Netherlands also plays an important role. The greater the competition, the more likely lenders are to accept a smaller margin.
The interest rate forecast above clearly shows how the capital market and mutual competition have developed since the various mortgage providers last changed their rates.
The above forecast is generated using Machine Learning; no rights can be derived from this expectation.
