NMa’s Mortgage-Rate-Calculation-Method : Actualization and Reinterpretation

In this paper we reconstruct the way in which the Netherlands Competition Authority (NMa) estimated monthly profit margins on different types of Dutch mortgages in its Mortgage Market Sector Study published May 2011. These margin series are then extended and consistently updated until July 2012. The series serve as a base for analysing the excess margins after May 2009, when mortgage rates in the Netherlands begin to structurally deviate from those in the rest of Europe, over and above a normal average margin made before the credit crisis hit. The weighted average excess margin is remarkably high at 0.51 percentage points – with the exception of the period between December 2010 and March 2011, when the NMa conducted its sector inquiry. On an average mortgage rate of 4.56%, this implies a price mark up of almost 15%. The excess margin on the variable mortgage rate after May 2009 is found to be consistently positive and averages 0.57 percentage points, which is a price mark up of almost 20%