Kingdom of the Netherlands-The Netherlands: Financial Sector Assessment Program- Technical Note on Macroprudential Policy Framework

Author: International Monetary Fund. Monetary and Capital Markets Department

Volume/Issue: Volume 2024 Issue 171

Publication date: June 2024

ISBN: 9798400279980

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Topics covered in this book

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Banks and Banking , Finance , Economics- Macroeconomics , Money and Monetary Policy , International - Economics , Financial sector stability , Macroprudential policy , Loans , Systemic risk assessment , Countercyclical capital buffers , Housing prices , Systemic risk , Macroprudential policy instruments , Housing , Mortgages

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Summary

Macroprudential policy in the Netherlands has centered on the residential real estate (RRE) market given the importance of this market for households, banks, and insurers. RRE represents nearly 50 percent of total household assets, and housing loans account for about 85 percent of total household liabilities, more than half of Dutch banks’ domestic loan portfolio, and 15 percent of insurers’ assets. Authorities have therefore actively used RRE-related macroprudential tools, such as banks’ capital risk weighting of residential mortgage loans, limits on loan-to-value (LTV) and debt service-to-income (DSTI) ratios for mortgages, or mortgage interest deductibility from taxes (MID).