Your house in the Netherlands as a Booming Money Machine…???
There is an extremely overbought housing market in the Netherlands.
This is related, among other things, to the extremely low-interest rates and a huge lack of houses.
The result is that you get a kind of collective so-called “Bulk Hysteria”. Everyone is running after each other. Those who can afford it, easily offer 50K! above the actual asking price.
Another consequence is that people who have owned a home for a certain number of years are seeing that the value of their home increases and are rapidly realizing a huge surplus value on their property. Their property is worth far more than their mortgage debt.
Yet another consequence is that a number of people who have realized these surpluses are motivated to take out a 2nd mortgage in addition to their 1st mortgage for example, for remodeling their houses but also to give financial help to a child who wants a home of their own.
This year 2021 alone, more than 50,000! second mortgages were taken out in the Netherlands.
Here’s the problem
The market can remain overexcited for a very long time and just keep going up and up and up.
Everyone seems to keep forgetting that if you keep stretching a rubber band it will eventually snap.
History has taught us that so many times!!
I am convinced that at some point the housing market prices will also drop substantially.
When…I really don’t know.
What I do know is that when the point of decline arrives, many people who have taken out too high second mortgages suddenly find themselves with far too much debt. The value of their property has suddenly become much less valuable, so the debt will be in a lot of cases higher than the value of their property. This could have(and will have) dramatic financial effects on many of those people.
It’s actually very simple. As you can see on the image of the runner above, at some point they will reach the top, and then, of course, they will go down again. There is no way around it… it is a natural law.
The same will happen with the housing market…as always(at some point) this market will follow the natural law as well.
Therefore my advice is to be very cautious about taking out these second mortgages.
You might end up regretting it!
Regards,
