Record in mortgage loans granted in 2022, despite a decline in the second half

In the first half of 2022, mortgage lending continued to rise after a similarly strong 2021, with a growth of over 10% in granted loan amounts.

From the second half onward, rising interest rates and the impact of the energy crisis, among other factors, began to affect the repayment capacity and, consequently, credit granting. In terms of amount, 4% less credit was granted in the second half of 2022 compared to the second half of 2021.

Nevertheless, a record amount of mortgage credit was granted throughout 2022, despite a 5% decrease in the overall number of credit agreements compared to 2021.

Interest rates played a significant role in the past year's evolution, especially in the second half. According to figures published by the National Bank of Belgium, interest rates in November 2022 ranged from 2.76% (for variable-rate loans with an initial interest rate period of over 10 years) to 3.67% (for loans with an initial fixed interest rate period of over 1 year and less than 5 years).

Interest rates played a significant role in the past year's evolution, especially in the second half. According to figures published by the National Bank of Belgium, interest rates in November 2022 ranged from 2.76% (for variable-rate loans with an initial interest rate period of over 10 years) to 3.67% (for loans with an initial fixed interest rate period of over 1 year and less than 5 years).

Regarding the entire year 2022:

A focus on the fourth quarter of 2022 compared to the fourth quarter of 2021 provides the following results:.

The number of loan applications in the fourth quarter, excluding those related to external refinancing, saw a decrease of approximately 25% compared to the same quarter of the previous year. The underlying amount of loan applications decreased slightly less, by 24.5%.

In comparison with the fourth quarter of 2021, the number of granted mortgage loans in the fourth quarter of 2022 decreased by 9% in quantity and 3.8% in amount.

This decline in the number of granted loans is even more pronounced when compared to 2020 (-24%) and 2018 (-15.6%). In comparison with the record quarter Q4 2019 (due to the abolition of the housing bonus in Flanders), the decline is even more substantial at -47.6%.

In terms of the loan amount, there was also approximately 3.8% less credit granted in the fourth quarter of 2022 than in the fourth quarter of 2021. Compared to 2020 (-15.3%) and the exceptional fourth quarter of 2019 (-35%), there is also a decline, but when compared to the more "normal" year of 2018, there is still an increase of 3.8%.

The evolution of the number of loans by destination in the fourth quarter shows that slightly more than 56,500 new loans were granted for a total amount of approximately 9.5 billion EUR, excluding refinancing.

As previously mentioned, this represents a decrease of approximately 9% in the number of contracts and about 3.8% in the corresponding amount compared to 2021. When compared to the fourth quarter of 2021, this presents a mixed picture: the number of loans for home purchase (+1,020) was more than 3% higher in the fourth quarter of 2022 than in the fourth quarter of 2021. Also, the number of loans for home purchase with renovation (+411) increased by about 16.5%. However, the number of loans for other purposes (-1,980, -44%), renovation loans (-2,392, -18.6%), and construction loans (-2,837, -29%) saw a significant decline compared to the fourth quarter of 2021.

Additionally, the number of external refinancings in the fourth quarter of 2022 was significantly lower (-64%) than in the fourth quarter of 2021. There were still about 3,000 external refinancings granted for a total amount of just over 400 million EUR.

The average amount of a construction loan stabilized at around 214,000 EUR in the fourth quarter of 2022. This represents an increase of about 45,000 EUR (+26.8%) since the beginning of 2019.

The average amount of a home purchase loan decreased slightly to approximately 194,000 EUR in the fourth quarter of 2022. However, it should be noted that there has been an increase of 34,000 EUR (+21.5%) in less than 4 years compared to the beginning of 2019.

The average amount of renovation loans saw the most significant increase, from approximately 54,500 EUR at the beginning of 2019 to approximately 70,500 EUR (+29%) at the end of 2022. This represents an increase of nearly 16,000 EUR in less than four years.

The average amount of a loan for home purchase + renovation in the fourth quarter experienced a relatively strong decrease to approximately 191,000 EUR. This means there was even a slight decrease in this average amount compared to the beginning of 2019 (about 3,500 EUR less, or -1.9%).

In the fourth quarter of 2022, once again, more than 9 out of 10 borrowers (92%) opted for a fixed interest rate or a variable interest rate with an initial fixed rate period of at least 10 years. About 6% of borrowers opted for a variable interest rate with an initial fixed rate period between 3 and 10 years. The number of borrowers opting for an annually variable interest rate remained low at 2%.

Taking into account rising interest rates (see graph below), Belgian consumers overwhelmingly continue to choose stability, with a low percentage (2%) opting for an annually variable interest rate. However, even in the case of a variable interest rate, consumers are strongly protected by legislation. The variable interest rate, after adjusting to changes in applicable reference indexes, can never exceed double the initial interest rate.

The credit sector is and remains aware that mortgage lending must be carried out with great care, and responsible lending should always be the primary focus. In this regard, the sector is in alignment with regulators, as lenders must exercise caution to prevent individual borrowers from taking on excessively large loans while also safeguarding long-term financial stability.