balance of payments confidence in the guilder had been restored.
During the past year we aimed at creating large series of mortgage
bonds, which contributed to their negotiability. In 1976 we marketed
seven different series of mortgage bonds in all, with interest rates
varying from 8% to 10%.
The FGH aims at covering the greatest possible part of its capital
needs by issuing mortgage bonds.
As in other years, we covered additional requirements in the private
capital market. In view of the structure of the FGH and the degree
of solidity of our company, operating in this market presents no
problems. The ratio in which we attracted our funds from the open
and the private capital market during the past year was 2 to 1As a
mortgage bank we have to look for our passive financing almost
exclusively to these two markets. As stated above, from the point of
view of profitability, synchronization of passive and active flows of
finance is the first requisite in these times. The continuous demand
for mortgage credit makes it necessary for the mortgage bank to
make a constant appeal to the open and the private capital
market. For our appeal to the open capital market we have the in
strument of the continuing issue of mortgage bonds at our disposal,
where period of issue, rate of interest and price can be adapted to
market developments. It is clear that this instrument should be
handled by us with the utmost care so as not to create an obscure
situation to our lenders.
In spite of the fact that on the whole 1976 was not a favourable
year for Dutch industry, we can all in all look back to a good year
in our company.
In the finance business the great demand for mortgage credit per
sisted during the past year.
As far as residential mortgages are concerned, the explosive growth
cannot be accounted for by activities in house-building. During the
past two years the number of dwellings completed has clearly
been at a lower level than it was in the early 1970s. In the sector of
existing houses, however, the acquisition of rented houses by in
dividuals has rapidly increased of late years. It is especially this
sector that has contributed to the growth of the market for mortgage
credit. The private house still provides an attractive hedge against
inflation, whereas he who lives in a rented house is only confronted
with the drawbacks as a result of the constantly increasing rental
burden. Furthermore, thanks to the continuous increase in value the
private house offers the possibility, by increasing the existing mort
gage, of obtaining relatively cheap credit for consumption, which can
be used to finance durable consumer goods. This, too, partly ac-
