According to figures from the Professional Association of Creditbrokers (BVK) and banking federation Febelfin Belgian banks issued just over 43,000 new mortgages during the first 3 months of this year. This down 36% on the same period last year. Rising interest rates are the main reason for the sharp fall.
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Far fewer people taking out mortgages due to rising interest rates
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Demand for mortgages and credit in general has been falling for around a year now. During the first quarter of 2023 the number of applications for credit was 37% down on the same period last year. Meanwhile, the number of mortgage loans issued was 36% lower than during the first quarter of 2022. Between 1 January and 31 March a total, of just over 43,000 new mortgages were issued with more than 7 billion euro being lent.
The main reason for the fall in the number of people wishing to lend money is of course the rise in interest rates. In February of this year those wishing to take out a mortgage with an interest rate that is fixed for the next 5 years were offered interest rates averaging 4.31%. Those opting for a fixed interest rate during for the coming 10 or more years were offered interest rates averaging 3.11%.
"Among other things, rising interest rates have led to falling demand, and consequently to a fall in the number of loans issued," the General Secretary of the Credit Professional Association Ivo Van Bulck told VRT News. He added that "The decline in demand for credit also continued during the first quarter of the year and will probably lead to a decline in lending during the second quarter as well."
Meanwhile, the average amount lent by those buying a home fell slightly in the first quarter of 2023 to approximately 191,000 euro. The average amount for the construction of a new property also fell slightly in the first quarter of 2023 to 207,000 euro.
After a fall during the previous quarter, the average amount lent for the purchase and renovation of a property rose again to around 201,000 euro.