Dutch pension funds ABP, SPW and BpfBouw have announced that they are expanding their investments in the residential mortgage market.

The three pension funds will be investing €1.74bn in the Netherlands’ largest mortgage provider, Munt Hypotheken.

With an investment in mortgages, the pension funds provide the lender with financing to purchase mortgages.

The funds will impose several conditions on this, such as the duration and risk class.

Furthermore, the energy label of the house and whether it was purchased with a national mortgage guarantee are also relevant to the investment.

In total, ABP will be investing €4bn in the Dutch mortgage market through its service provider APG.

It stated that Dutch residential mortgages were an attractive investment due to their stable returns and low risk.

“The Dutch are known for always paying their mortgage very neatly,” commented APG senior portfolio manager, Kay Mennens.

“This is partly due to the high requirements set by law in order to obtain a mortgage, but also to the regulations that prevent people from running out of money.

“That makes the risk very small that people will no longer pay their mortgage.

"The knife cuts both ways: it is a solid investment in the Dutch housing market with a stable return, while at the same time Dutch homeowners are assured of a good mortgage with fair conditions."

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