To our money and capital markets this resulted in a rise in
interest rates.
Although in many cases the currency unrest was not directly aimed
at the guilder, the effect of notably the flight from into DM was
clearly noticable in this country. Because to the foreigner the
guilder area is limited, the movements manifest themselves directly
in the development of interest rates in the Dutch bond market,
which can therefore be looked upon to an increasing extent as
a derivative from the currency market.
From the following figures we may conclude that the factor
'Foreign Countries' is gaining an increasing influence on the total
supply of capital in the bond market: if in 1975 the supply from
abroad was limited to 5.37%, during the first half of 1978 it had
increased to 47.12%.
Such a development involves the risk of considerable fluctuations
in interest rates. The disappearance of the foreign demand for
or supply of Dutch foreign-held bonds has, by its magnitude,
a direct influence on interest rates. If during the first half of the
year there was still an ample foreign demand, its disappearance
in the second half of 1978 had an interest rate increasing effect,
despite the fact that there was a high real interest margin
(interest -/- inflation) in the Netherlands.
In addition to the currency unrest mentioned above, specially the
deterioration of the balance of payments position played a part.
In 1978 we made calls on the capital market for an amount of
1.577 million, of which 813 million could be covered on the
mortgage bond market. The balance of 764 million was attracted
on the private market.
Active finance
In 1978 the interest rates for mortgage loans showed less strong
fluctuations than in 1977; the lowest point - in April 1978 - lay
about 1f% below the highest point - in October 1978. As a whole
mortgage interest rates in 1978 were a little lower than in 1977.
The amount of quotations accepted, which was more or less evenly
distributed over the 4 quarters, rose to 1.838 million (in 1977:
1.814 million). In 1978 the number of (accepted) quotations was
6.600 (in 1977: over 7.300).
In 1978 mortgage loans to an amount of 1.771 million were
granted, whereas redemptions to an amount of 565 million were
received, which resulted in a net increase of the portfolio of
1.206 million; as at the end of 1978 the mortgage portfolio
amounted to 5.140 million.
From the figures it appears that the net increase in 1978 differs
little from that of the previous year. In view of the market
conditions we consider this result highly satisfactory.
In fact, the economic stagnation and the delayed growth in the
demand for houses for owner-occupation have led to a decrease
in the rate at which the demand for mortgage credit is being
effectuated and a delay in the sale of mortgage loans. During the
past year the reluctance to make other than replacing investments
played an important role in the mortgage production in the sector
of commercial credits.
