Mortgage loans in the Netherlands are originated either directly through the branch network of the originating bank or insurance company, or through an independent intermediary. Most mortgage loans are originated in compliance with the Code of Conduct (see below), including LTV and LTI limits. Furthermore, a substantial share of mortgage loans is originated under the National Mortgage Guarantee. This guarantee provides insurance against any residual debt in case of a foreclosure.
Besides the branch networks of individual banks and insurance companies, there is a large number of intermediaries in the Netherlands (both franchisees and individual intermediaries) that provide independent advice. Due to new legislation, from 2013 onwards, commissions from originators to intermediaries are prohibited. Instead, clients have to pay intermediaries directly for their services.
Code of Conduct and Regulation mortgage market
In a joint effort, the Dutch Banking Association (Nederlandse Vereniging van Banken, NVB) and the Dutch Association of Insurers (Verbond van Verzekeraars) have introduced a code of conduct for mortgage loans (gedragscode hypothecaire financieringen), which is ratified by all banks, mortgage banks, and insurance companies.
The Code has a 'comply or explain' nature, with limited possibility to deviate from the Code principles. A vast majority of mortgage loans in the Netherlands is originated in line with the principles of the code of conduct, including borrowing limits based on collateral value and income. The maximum ratio of loan to market value of the collateral (LTMV) is established in the Code. Borrowing capacity based on income is determined in collaboration with the National Institute for Family Finance Information (NIBUD), which estimates housing costs in the Netherlands.
Since December 2012, the maximum LTMV and the income based borrowing capacity are also ruled by law (Regulation on Mortgage Lending).