Unrest has again arisen about the way in which student debt is taken into account in the calculation of the maximum mortgage. A data company has developed a new technique that makes it easier to forward student debt documents to lenders. After stories in the press, the VVD announced questions to Minister Kajsa Ollongren of Wonen.
At the relevant company, Mortgages Data Network (HDN), they say they understand that the subject is sensitive. However, nothing changes to the policy, only to the technology and the process, a spokesperson explains. “An adviser or mortgage lender cannot access the data without the customer’s permission.” Ollongren’s spokesperson also confirms that there is no direct line between the bank and student loan provider DUO.
When you apply for a mortgage for the purchase of a house, you must submit all kinds of documents. Many mortgage advisors work with an app that gets the data in the right place in one go. Then as a home buyer you do not have to request and send a document for every service (such as My Pension Overview, UWV and DUO). It is also easier for mortgage lenders that they do not have to retype those documents. The data appears immediately in their system, which can then automatically calculate the amount of the loan that the customer can bear.
Student loan puts pressure on borrowing capacity
In this way, the cabinet is encouraging homebuyers to conceal their student debt. That is dangerous
The point is of course: the higher the student debt, the less money you can borrow for a house. And since 80 percent of homes are outbid, home buyers want to use all the space they can get. A student loan weighs heavily on the borrowing capacity. You can roughly say that you have to deduct double the amount of the original loan. So a student loan of 20,000 euros means that you can borrow about 40,000 euros less for a house.
The fact that Minister Ingrid van Engelshoven of Education emphasized earlier this year that the handling of student debts by mortgage lenders should not have a ‘deterrent effect’ on studying, shows that the current policy is problematic: it is prohibited to conceal student debts and mortgage lenders are obliged to ask. but a central registration of student debts, as suggested by her D66 colleague in the cabinet Kajsa Ollongren, would only have a deterrent effect. Not the student loan itself.
To hide student debt or not?
“The cabinet is thus encouraging home buyers to conceal their student debt,” says Marga Lankreijer-Kos, mortgage expert at Independer. ,,That is dangerous. Mortgage lenders look at income and expenses. Paying off student debt is an expense. Ignoring this expense encourages excessive lending.”
One in three advisers cooperates in concealing student debt, according to an investigation by the Authority for the Financial Markets, after which the call for insight into student debt for banks increased.
All parties in the House of Representatives except the SGP voted against a debt statement that is transparent to banks and thus place the responsibility on the home buyer, who must choose whether he wants to take the risk of lying about the student loan – something for which you can get into trouble if you can no longer pay the mortgage. The SGP finds it unfair that honest consumers are now being trumped in the housing market by house seekers who dare to lie about their student debt.
VVD MP Daniël Koerhuis tweeted that he thinks it should be easier for starters to buy a house, not more difficult, in response to the technical change announced by HDN. His comment is a disguised plea to stretch the lending options for home buyers, whereas the regulator and advisory body De Nederlandsche Bank just yesterday argued in favor of limiting the debts because they cause ever higher house prices. And for higher risks for the Dutch economy when house prices start to fall again.
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