Wealth formation of Dutch households: a policy assessment

Over the last decades, Dutch households have seen a strong growth in both their pension savings and equity in their homes. At the same time, their mortgage debts have also increased. On balance, their net wealth grew while their balance sheets also expanded. In view of the ageing population, the growth in net wealth is, in principle, good news. However, the longer balance sheets have also made households more vulnerable to fluctuations in interest rates and asset prices, as housing market developments made painfully clear in recent years. The growth of the mortgage portfolio has also increased the financial risks for banks. In addition, long balance sheets have an amplifying effect on the cyclicality of the Dutch economy.