Dutch financial supervisor mulls tightening mortgage lending rules

Special Report:Global Financial Crisis　

BRUSSELS, Dec. 8 (Chinese media) -- The Dutch Financial Markets Authority (AFM) is considering tightening the rules for banks to provide mortgages, Dutch daily Financiele Dagblad reported Monday.

With the sales and the construction of houses stagnating in recent months, the banks and the construction sector have been calling on the government to raise the ceiling of mortgage guarantees to boost the housing market.

AFM Chairman Hans Hoogervoorst said in a TV program last weekend that banks might find it too easy to provide mortgages that were too high. The AFM and the Dutch central bank were currently investigating whether the current rules were strict enough.

"There are a lot of people who take out a mortgage that is higher than the value of their house. Half of the loans are also free of repayment of principal, which means that you retain your debt for a long time. We really have to see whether the rules need to be tightened up," Hoogervoorst was quoted as saying.

But Hoogervoorst said the mortgage problems in the Netherlands were not so bad as in the United States.

There are payment problems with only one in 1,000 mortgages, compared with seven in 1,000 in the United States, he said.

But the AFM chairman also warned the situation could change as the Netherlands was only at the start of the economic downturn.