Residential mortgages
The housing market
The condition of the Dutch housing market clearly improved in 2014. After a lengthy decline in
the annual number of residential property sales, the number of transactions increased sharply
(by 39.4% compared to 2013) during the reporting period and the average house price also
rose slightly (by 0.9% compared to 2013).This improvement, which started in mid-2013, is
mainly driven by increased confidence in the housing market, low mortgage interest rates and
the affordability of owner-occupied homes.
Market share
The share of Rabobank Group in the Dutch mortgage market amounted to 21.5% (26.0%) of new
mortgage production in 2014. The fall in market share was mainly due to the greater involvement
of insurers in the mortgage market. The market shares of the local Rabobanks and Obvion fell
to 16.3% (19.2%) and 5.2% (6.6%) respectively. At year-end 2013, Friesland Bank was still
contributing 0.2% to Rabobank Group's total market share. All the customers of Friesland Bank
were transferred to the local Rabobanks in 2014.
Mortgage portfolio
Although the housing market is recovering, the number of transactions and mortgage sales in
2014 have not yet returned to pre-crisis levels. Furthermore, many mortgage customers have
again made early repayments on their loans in addition to their regular repayments.They have
been prompted to do this by the possibility of negative equity in their home, the low interest
payable on savings and the encouragement of mortgage repayment due to a temporary
exemption of the gift tax. On balance, Rabobank Group's mortgage portfolio contracted to
EUR 205.0 (209.1) billion in 2014.
National Mortgage Guarantee (Nationale Flypotheek Garantie, or NHG) financing accounts for
21% of the mortgage portfolio. The size of the NHG portfolio increased by EUR 0.4 (2.7) billion in
2014. The revised tax treatment of owner-occupied homes introduced on 1 January 2013 has
led to an increase in the number of annuity-based and straight-line loans in the mortgage
portfolio. The changes to the tax regime have made mortgages with capital accumulation and
interest-only mortgages less attractive, and the proportion of these types of mortgage has
declined. Customers with 100% interest-only finance accounted for 24.6% (25.3%) of the
mortgage portfolio at the end of 2014.
The weighted average indexed loan-to-value (LTV) of the mortgage portfolio improved slightly
to 78% in 2014 (81%). The improvement was due to repayments and additional repayments, an
increase in pledged savings and a small increase in the average price of existing owner-occupied
homes. The LTV exceeds 100% for approximately 18% of the mortgage portfolio, excluding NHG.
Concern for affordability
Rabobank wishes to avoid a situation in which customers have difficulty in making payments as
much as possible. This is in the interests of both the customer and the bank, and of course
begins with suitable advice and an appropriate mortgage. Regular checks are made during the
term to assess whether the mortgage is still appropriate to the customer's personal situation.
During the advisory process, the affordability of the mortgage is considered. An assessment is
made as to whether the customer can continue to pay the costs of the loan in changed
circumstances, including unemployment or occupational disability. The potential financial
consequences of these risks are discussed with the customer, after which it may be decided
that the customer should take out insurance to cover these risks. Nevertheless, it sometimes
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Annual Report 2014 Rabobank Group
