Stef Blok, the Dutch housing minister, has conceded the government’s plans for a National Mortgages Institution (NHI) are still in limbo due to the European Commission’s ongoing concerns the initiative is a form of state support.
Speaking at the IIR Securitisation Event in Amsterdam for bankers and investors, Blok said he was still waiting for the “green light”, according to local financial news daily FD.
“I am still keen on getting the NHI off the ground, but the Commission is anxious about government support,” he said.
The Dutch government has been in talks with Brussels on the matter since the summer of last year.
The NHI would offer institutional investors mortgage bonds under the existing national mortgages guarantee scheme (NHG), at the same time relieving some of the pressure on banks’ balance sheets, allowing them to increase corporate lending.
Two years ago, proponents of the NHI suggested it could cut mortgage interest rates by 0.5 percentage points.
But the European Commission has demanded that Dutch banks pass on any financial benefits to mortgage takers.
For their part, the banks claim this would be impossible, as they would finance their NHG portfolios partly through the NHI and partly through more traditional means such as savings deposits.
Perhaps the most important benefit for investors in NHI bonds would not be the additional guarantee but the improved marketability of NHI bonds, as well as increased transparency.
“Apparently,” Blok said, “financing of mortgages under NHG guarantee is too complicated for investors.”
Another potential problem, the FD suggested, is that Eurostat – the EU’s statistics bureau – may add the NHI’s mortgages to the national debt. If this were the case, it said, the Dutch Treasury would block the initiative.
Recently, the National Investment Institution (NHII), another initiative to boost the local economy, was launched with combined investments of €400m in small and medium-sized companies by insurers and pension funds, including the €20bn pension fund for the printing industry PGB and the €65bn metal scheme PMT.
However, the NHI has the potential for much larger investments, as current mortgages issued under NHG guarantee less than €180bn in total.
Although current mortgages cannot be issued through the NHI, it is an indication of the scale of the market.
The FD, citing anonymous sources, said interest in the initiative was fading among investors and banks due to repeated delays and the fact that alternative means of financing are now cheaper due to low interest rates.