AFM Consumer Monitor Autumn 2021 - Mortgage Holders

AFM Consumer Monitor Autumn 2021 Component: Mortgage Holders © Ipsos 2021. All rights reserved. Contains Ipsos' Confidential and Proprietary information and may not be disclosed or reproduced without the prior written consent of Ipsos.

© Ipsos 2021 2 Introduction Background The AFM advocates for fair and transparent financial markets. As an independent behavioral supervisor, the AFM contributes to sustainable financial well-being in the Netherlands. The Consumer Monitor measures developments in consumer behavior over time. The Consumer Monitor was launched in 2004 and has been conducted every six months since then. The primary objectives of the Consumer Monitor can be summarized as follows: • Describing the behavior and attitudes of financial consumers • Describing market and product aspects in the financial market. Guide to this Report This report concerns the Consumer Monitor, conducted in the autumn of 2021 (Q3 2021). The fieldwork took place from August 5 to August 13, 2021. This report covers the sub-topic "Mortgage Holders" (N=603). The report addresses behavior and attitudes regarding mortgage types, interest rate fixation periods, and contact with the advisor. Additionally, several questions were asked regarding (possible) consequences of the Corona pandemic. The presented results are representative of Dutch mortgage holders aged 18 and older. Where possible, results are compared with previous measurements. All differences described in the report are significant. With a sample size of N=603, the margin of error is +/- 4 percentage points.

© Ipsos 2021 The Mortgage 1

© Ipsos 2021 4 What type of mortgage do you have? (Multiple answers possible) What type of mortgage do you have? Base: all respondents: 2016-2020: n=405-623; 2021: n=603 • The interest-free mortgage is once again, by a considerable margin, the most common mortgage type (63%). Older people are more likely to have an interest-free mortgage than younger people (18-34 years: 20%; 35-44 years: 51%; 45-54 years: 64%; 55+ years: 82%). • The annuity mortgage continues its upward trend, rising to 42%. Among younger people (up to 34 years), this is the most common mortgage type (64%; 35-44 years: 50%; 45-54 years: 40%; 55+ years: 31%). • Highly educated people relatively often have an annuity mortgage (education level low: 37%; medium: 36%; high: 48%). Low-educated people, on the other hand, relatively often have an interest-free mortgage (71%; education level medium: 68%; high: 55%). Interest-free mortgage still the most common mortgage type. Share of annuity mortgages continues upward trend

© Ipsos 2021 5 Which component makes up the largest part of your current mortgage amount? Which component makes up the largest part of your current mortgage amount? • Even when looking at the mortgage type that makes up the largest part of the current mortgage amount, the interest-free mortgage is the largest (40%), followed by the annuity mortgage (28%). • Among young people up to 34 years, the linear mortgage is proportionally more often the largest component of the mortgage compared to other age groups (15%; 35-44 years: 6%; 45-54 years: 6%; 55+ years: 1%). For four out of ten mortgage holders, the largest component of the mortgage is interest-free Base: all respondents: 2016-2020: n=405-623; 2021: n=603

© Ipsos 2021 6 Loan-To-Value (LTV) Base: all respondents for whom LTV is known: Loan-to-Value (Mortgage Amount / WOZ Value * 100%); excluding 'unknown' 2016-2020: n=269-484; 2021: n=405 The share of mortgage holders with a Loan-To-Value of more than 100% is declining LTV unknown: 27% 21% 26% 32% More than 100% 100% or lower 34% 33% • For respondents for whom both the exact height of the mortgage and the WOZ value of the home are known, it is possible to calculate the Loan-To-Value (LTV). The LTV shows that one in ten (9%) mortgage holders has a higher mortgage amount outstanding than the WOZ value of the house; this is less than a year ago (then 15%). • The share of mortgage holders with an LTV of 100% or higher has shown a declining line for several years. On the one hand, this is explained by the rising WOZ values of homes in recent years. On the other hand, since January 1, 2018, the maximum mortgage can only be 100% of the value of the house. • For mortgage holders who have partially repaid their mortgage in the meantime, the LTV is more often known than for mortgage holders who have not repaid; they are thus better aware of their mortgage amount and WOZ value. Furthermore, they more often have an LTV of 100% or lower; 96% of mortgage holders who have partially repaid have an LTV of 100% or lower, 88% of the mortgage holders who have not partially repaid have an LTV of 100% or lower, • The median of all LTVs is 66%. The median of mortgage holders with an LTV of more than 100% is 114%.

© Ipsos 2021 7 Yes No Don't know Did you also use National Mortgage Guarantee when taking out the mortgage? Did you also use National Mortgage Guarantee when taking out the mortgage? Base: all respondents: 2019: n=405; 2020: n=605; 2021: n=603 Total Closed via intermediary Directly closed • More than four out of ten (43%) mortgage holders used NHG when closing the mortgage, which is comparable to last year (44%). • When the mortgage is closed via the intermediary, NHG is used in half (50%) of the cases; for mortgages directly closed at a bank or insurer, this is one third (34%). • Two thirds (66%) of mortgage holders younger than 35 years used NHG when closing the mortgage, and this is also comparable to last year (then 67%). Share of mortgage holders who used National Mortgage Guarantee has remained stable

© Ipsos 2021 Interest Rate Fixation Period 2

© Ipsos 2021 9 One fifth of mortgage holders has an interest rate fixation period of more than 20 years • One third (34%) of all mortgage holders has fixed the interest for a maximum of ten years, and one fifth (21%) has chosen an interest rate fixation period of more than 20 years. This difference does not differ significantly from last year, although a trend is visible in the long term. Given the low interest rates, it is not surprising that people now more often choose a long interest rate fixation period than a few years ago. For which interest rate fixation period did you choose? Base: all respondents: 2016-2020: n=405-623; 2021: n=603 Interest rate fixation period in 2021 Interest rate fixation period over the years For which interest rate fixation period did you choose?

© Ipsos 2021 10 Two thirds of mortgage holders made a choice regarding their interest rate fixation period in the past five years • Given the trend towards choosing increasingly longer interest rate fixation periods, it is not surprising that for a large part of mortgage holders it will still take several years until their interest rate fixation period (again) expires. For about half (47%) of mortgage holders, it will take longer than ten years before their interest rate fixation period expires, and for eight out of ten (81%) at least four years. • Two thirds (67%) of mortgage holders made a choice regarding the interest rate fixation period of their mortgage in the past five years, and four out of ten (39%) did this in the past two years. In how many years will your interest rate fixation period expire? How many years ago did you last make a choice regarding the interest rate fixation period of your current mortgage? Base: all respondents with an interest rate fixation period: 2021: n=570 Base: all respondents: 2021: n=603 In how many years will your interest rate fixation period expire? How many years ago did you last make a choice regarding the interest rate fixation period of your current mortgage?

© Ipsos 2021 11 About half of mortgage holders expect to extend the existing mortgage when the interest rate fixation period expires • Half (47%) of mortgage holders whose interest rate fixation period expires within three years expect to extend the existing mortgage then. A quarter (24%) does not (yet) know what they are going to do. • At the last choice moment around the interest rate fixation period, 27% of mortgage holders chose to take out a new mortgage, 23% chose a new interest rate, and one fifth (18%) extended the existing mortgage with a different interest rate fixation period. • Compared to last year, fewer mortgage holders chose to take out a different mortgage type with the same provider (2021: 7%; 2020: 11%). What choice do you think you will make when your interest rate fixation period expires? What choice did you make when you could make a choice around the interest rate fixation period? Base: respondents whose interest rate fixation period expires within 3 years: 2021: n=71 Base: all respondents: 2021: n=603 What choice do you think you will make when your interest rate fixation period expires? (Multiple answers possible) What choice did you make when you could make a choice around the interest rate fixation period? (Multiple answers possible)

© Ipsos 2021 12 One in ten expects not to be able to pay monthly costs if their mortgage costs become 1.5 times larger • Of the mortgage holders who made a choice regarding the interest rate fixation period in the past two years or have to make a choice in the next two years, more than half (56%) take into account the possibility of a sharp interest rate increase. One in ten (10%) states that they do not take this into account or did not. • Furthermore, one in ten (10%) mortgage holders who recently made a choice or have to make a choice in the coming year states that they expect not to be able to pay their monthly costs if the mortgage costs become 1.5 times as large. Among mortgage holders with below median income, this is even 18%. • In 2005, the AFM estimated that if the mortgage interest rate were to rise by two percentage points, some 80,000 households would come into trouble, on top of the 180,000 households that already had payment problems at that time*. In total, this concerned almost 9% of the mortgages concluded in the Netherlands at that time. • Mortgage holders who made a choice regarding the interest rate fixation period in the past two years differ in this regard from mortgage holders who have to make a choice in the coming two years. Base: all respondents who make a choice regarding interest rate fixation period in the past or coming two years: 2021: n=289 Suppose the interest rate doubles and your monthly mortgage costs therefore become 1.5 times as large. Do you expect to be able to pay these increased monthly costs? Statement: "When choosing the interest rate fixation period, I take into account / I took into account that the interest rate could rise sharply in the next five years" To what extent do you agree or disagree with the following statements? *Source: https://www.afm.nl/nl-nl/nieuws/rapporten/2005/renterisico

© Ipsos 2021 13 One quarter of mortgage holders who considered switching mortgages actually did so • Of the mortgage holders who have not made a choice regarding the interest rate fixation period in the past two years and who have not switched their mortgage before, one quarter (26%) did consider doing so. This is comparable to last year (then 31%). • Ultimately, 6% of all mortgage holders switched their mortgage, which amounts to 24% of the mortgage holders who considered switching. Did you consider switching your mortgage in the past two years? Base: all respondents who have not made a choice regarding the interest rate fixation period in the past two years and whose mortgages have not been switched before: 2021: n=301. Did you consider switching your mortgage in the past two years? Has taken action (2020: 9%) Has considered switching (2020: 31%)

© Ipsos 2021 14 Six out of ten young people are not familiar with interest averaging. Overall, familiarity is comparable to last year Are you familiar with interest averaging? Source: https://www.afm.nl/nl-nl/consumenten/themas/producten/hypotheek/rentemiddeling Base: all respondents: 2016-2020: n=405-623; 2021: n=603 • With interest averaging, the current interest contract and the associated interest fixation period are terminated, and a new interest with a (longer remaining) interest fixed period is agreed with the mortgage provider. In 2021, half (48%) of the mortgage holders were (broadly) familiar with interest averaging. This is comparable to last year. • Nearly six out of ten (57%) young people up to 34 years are not familiar with interest averaging (35-44 years: 41%; 45-54 years: 44%; 55+ years: 31%). In 2021, half (48%) of the mortgage holders were (broadly) familiar with interest averaging. Familiarity with interest averaging in 2021 Familiarity with interest averaging over the years Are you familiar with interest averaging?

© Ipsos 2021 15 One in seven mortgage holders who is familiar with interest averaging has also applied it to their current mortgage • Of the mortgage holders who are familiar with interest averaging, 14% have applied it to the current mortgage, and this is also comparable to last year. Six out of ten (61%) have not applied it and do not consider it. Have you applied interest averaging to your current mortgage? Have you applied interest averaging to your current mortgage? Base: respondents who are familiar with interest averaging: 2016-2020: n=249-411; 2021: n=369

© Ipsos 2021 Repayment 3

© Ipsos 2021 17 One third of mortgage holders has ever made extra repayments on the mortgage • One third (34%) of mortgage holders has made extra repayments on the mortgage. This is comparable to last year (then 35%). 17% of mortgage holders state that they have increased the mortgage amount, and this is also comparable to last year. • Young people have of course made extra repayments on their mortgage less often than older people (18-34 years: 21%; 35-44 years: 29%; 45-54 years: 35%; 55+ years: 40%), but there is no difference between age groups regarding increasing the mortgage amount (18-34 years: 14%; 35-44 years: 16%; 45-54 years: 15%; 55+ years: 17%) Indicate whether you have ever made the following changes to your current mortgage: extra repayment, increased mortgage amount Increased mortgage amount or extra repayment on mortgage Extra repayment on mortgage Base: all respondents: 2016-2020: n=405-623; 2021: n=603

© Ipsos 2021 18 The Coronavirus has only influenced a small group of mortgage holders' choice to adjust the mortgage Base: respondents who have increased the mortgage amount: n=95 Base: respondents who have made extra repayments: n=211 Base: respondents who have not made extra repayments: n=397 Corona played a role in my choice to... To what extent do you agree or disagree with the following statements? 2020 2021 • For a majority of mortgage holders, the Corona/COVID-19 virus played no role in their choice to make changes to the mortgage. • One in twelve (8%) mortgage holders (partly) due to the pandemic increased the mortgage amount, and only 4% made extra repayments on their mortgage because of it. For one in ten (9%) mortgage holders, Corona played a role in not making repayments on their mortgage.

© Ipsos 2021 19 For four out of ten mortgage holders who make extra repayments, the most recent repayment was a year or less ago • Of the mortgage holders who have made extra repayments on the mortgage, 23% make structural extra repayments. This marks the end of the upward trend of recent years. • For about four out of ten (39%) of the mortgage holders who have made extra repayments, the last extra repayment was a year or less ago. How many years ago did you last make an extra repayment on your mortgage? Base: respondents who have made extra repayments; 2021: n=211 How many years ago did you last make an extra repayment on your mortgage?

© Ipsos 2021 20 Reducing monthly costs and the low interest rate on savings remain the main reasons for making extra repayments • The reasons given for making extra repayments do not differ from previous years. The main reasons are: (1) so that one has lower monthly costs (47%) or (2) due to the low interest rate on savings (38%). • Slightly more than one fifth of mortgage holders who have made extra repayments received extra financial means (23%) or did not like having a mortgage debt (22%). Why did you make extra repayments on your mortgage? Base: respondents who have made extra repayments; 2021: n=211 Why did you make extra repayments on your mortgage? (Multiple answers possible)

© Ipsos 2021 21 Definitely yes Probably yes Probably not Definitely no Don't know One in seven expects not to be able to pay mortgage costs in case of disability or unemployment • Two thirds (66%) of all mortgage holders expect that if they were to become disabled or unemployed, they could still continue to pay the mortgage. This is comparable to last year (then 70%). • If only respondents who mentioned an expectation regarding feasibility are included, 86% expect to be able to continue paying the mortgage costs and 14% expect that they cannot. Do you expect to still be able to pay the monthly mortgage costs if you become disabled/unemployed? Do you expect to still be able to pay the monthly mortgage costs if you become disabled/unemployed? Total Household Income Base: all respondents: 2016-2020: n=405-623; 2021: n=603 Over time

© Ipsos 2021 22 Definitely yes Probably yes Probably not Definitely no Don't know One in ten expects not to be able to pay mortgage costs after the death of themselves or partner • One in ten (9%) mortgage holders expects that the mortgage costs cannot be paid anymore if they themselves or their partner were to pass away. • If extra repayments have been made on the mortgage, 90% expect that the mortgage costs can still be paid after death compared to 84% if no extra repayments have been made. Do you expect that the monthly mortgage costs can still be paid if you/your partner passes away? Base: all respondents (excl. no partner): 2020: n=525; 2021 : n=510 Do you expect that the monthly mortgage costs can still be paid if you/your partner passes away? Total Mortgage switched Interim extra repayment

© Ipsos 2021 23 Four out of ten mortgage holders do not know that they may qualify for a lower interest rate through extra repayment • Six out of ten (58%) mortgage holders know that they may qualify for a lower mortgage interest rate when extra repayments are made, and one in five (18%) has also actually taken steps to qualify for this. This amounts to one third (32%) of mortgage holders who know that they may qualify for a lower mortgage interest rate when extra repayments are made. • Compared to last year, mortgage holders more often know that they may qualify for a lower mortgage interest rate (2021: 58% vs. 2019: 49%), but of the mortgage holders who know this, 28% took action then, which is comparable to this year (32%). At the moment you make extra repayments, it may be that you qualify for a lower mortgage interest rate. Did you know this? Base: all respondents 2021: n=603; respondents who know that they may qualify for lower interest: n=349 At the moment you make extra repayments, it may be that you qualify for a lower mortgage interest rate. Did you know this? 58% Know that they may qualify for lower mortgage interest

© Ipsos 2021 24 Heard of it and interesting Heard of it, not interesting Not heard of it, but interesting Not heard of it, not interesting Both familiarity and interest in the equity release mortgage remain stable: one in seven is familiar with it and has interest To what extent are you familiar with an equity release mortgage and does such a mortgage seem interesting to you? Base: all respondents 2021: n=603 To what extent are you familiar with an equity release mortgage and does such a mortgage seem interesting to you? The 'equity release mortgage' or cash-out mortgage When someone took out a mortgage years ago, it may have been paid down considerably in the meantime. The home of the mortgage holder then has equity: the house is indeed worth more than the height of the remaining mortgage. With an equity release mortgage, one then receives (part of) the equity of the house in cash, while continuing to live in the house. This money is often used as a supplement to pension, so it is often spoken of as a cash-out mortgage, equity release mortgage or senior mortgage • Familiarity and interest in the equity release mortgage remain stable. One in seven (14%) mortgage holders is familiar with this in 2021 and also has interest in it (2019: 13%). Among the target group of this mortgage, mortgage holders aged 55 and older, 70% have heard of it and 16% actually have interest. This is also comparable to last year, when 67% were familiar with it and 19% stated that they were familiar with it and had interest in it.

© Ipsos 2021 Sustainability 4

© Ipsos 2021 26 Mortgage holders are more likely than last year to consider making their home sustainable and take action • Mortgage holders have considered making their home sustainable more often in the past year than in the past; Two thirds (66%) of mortgage holders considered this in the past year vs. 61% in 2020. One third (32%) of mortgage holders considered this year to make their home sustainable and has taken action, which is four percentage points higher than last year (then 28%). • Mortgage holders with a low education relatively often state that they have not considered sustainability (46% vs. education level medium: 35%, education level high: 29%). • Mortgage providers and advisors seem not to actively approach their customers regarding the sustainability of the home after closing the mortgage. Only 6% of mortgage holders have been approached by their advisor or mortgage provider with possibilities for this. Have you considered making your home (more) sustainable in the past year? Have you ever been approached by your mortgage provider or mortgage advisor to make your home (more) sustainable? Base: all respondents 2021: n=603 Have you considered making your home (more) sustainable in the past year? Have you ever been approached by your mortgage provider or mortgage advisor to make your home (more) sustainable?

© Ipsos 2021 27 Sustainability is mainly financed using own means • Of the mortgage holders who have made their home sustainable or plan to do so, eight out of ten (78%) state that they do this with the help of own means and 15% take out an extra mortgage for it. • Mortgage holders who have made interim repayments on their mortgage can more often finance the sustainability with own means than if one has never made repayments on the mortgage (85% vs. 74%). • If one does not (further) go for sustainability, it is often because one does not have own means for this (30%) or because there is no