Dutch mortgage funds received €2bn in new deposits from institutional investors, such as pension funds and insurers, over the first three quarters of 2024, less than in previous years, according to De Nederlandsche Bank (DNB) figures.
Mortgage funds, established by mortgage lenders to allow investors to invest in their portfolios, have grown over the past decade from €4bn in 2013 to €82.5bn in 2024, now comprising about 10 per cent of the total Dutch mortgage stock.
DNB data found that from 2021 to the third quarter of 2024, these mortgage funds raised €26.2bn, with the largest part of this (€11.9bn) deposited by Dutch pension funds. The other investments came from foreign investors (€8.3bn) who can invest in Dutch mortgages through these funds.
However, since 2022 deposits in mortgage funds have been declining after reaching a peak of €13.1bn in 2021. In 2022 deposits fell to €7.8bn and then further fell in 2023 to €3.2bn.
DNB said declining interest in mortgage funds is a factor for both pension funds and foreign investors and insurers and said this coincided with the sharp rise in market interest rates over 2022. This created a larger range of interest-bearing investment products with sufficient returns, such as bonds.
In addition to this, pension funds are more likely to invest directly in mortgages, without the intervention of a mortgage fund.
Despite pension funds and insurers starting to invest less directly and indirectly in mortgages in recent years, banks have increased their share of the mortgage market after a decade of their mortgage holdings remaining virtually constant, with growth due to institutional investors.
In the first three quarters of 2024, banks' mortgage portfolios grew by €17.4bn.
For mortgage funds, this amounted to €2.0bn, for pension funds this totalled €2.8bn and for pension insurers it was €1.2bn. Other financial institutions accounted for €3.8bn in mortgages.
The Dutch mortgage stock has grown steadily this year, increasing by €26.9bn to €881.4bn in the first three quarters of 2024.
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