Mortgage Regulation and Public Interests

The Dutch Banking Association (NVB) asked SEO Economic Research to carry out research into the regulation of the mortgage market. The key question is:How effective is the mortgage market regulation and policy framework?The report evaluates Dutch mortgage market regulations across the board, by comparing the current situation with an ideal one. It proceeds from the assumption that that there must always be a reason for government intervention, explicitly taking into account the typical nature of the Dutch mortgage market and the risks associated with providing and taking out mortgages. It concludes that government intervention in the Dutch mortgage market is warranted. The current regulations in principle cover all the relevant problems; additional regulations are not needed. There are areas, however, where efficacy could be improved, and a better balance could be achieved between the need to meet goals on the one hand and any negative side effects on the other. There are also some contradictions between underlying goals, and some regulations have mutually reinforcing negative effects in terms of restricting credit. Regulation across the board could be substantially improved by revising some of the rules, paying more consideration to what the actual aim is. More emphasis also needs to be placed on this when implementing planned or proposed changes.