Interview
'Let’s now focus on the future'
Emeritus Professor of the housing market Johan Conijn on interest-only mortgages
Johan Conijn (69) likes to make strong statements. In 2017, he described interest-only mortgages as a potential time bomb and a killer. And in his view, knowledge is sometimes an illusion. What does he think about interest-only mortgages now?
'The problem is that many people do not see the consequences,' says Conijn. 'I don’t blame them for this. If there is anyone to blame, it is the ethos of the 1990s, when this type of mortgage was introduced recklessly for a tax benefit. But we should now focus on the future, and suggest solutions to consumers and urge mortgage providers to fulfil their responsibilities.'
'If there is anyone to blame, it is the ethos of the 1990s'
Problematische schuldenlast
Trend Monitor analysis
A thorough analysis of the problem is also appropriate. Conijn agrees in general with the conclusions in the Trend Monitor: 'It is a thorough and well-considered analysis founded on a rich database. The risks are well defined, and the main focus is on the refinancing risk, which is correct in my opinion.'
Critical points
But Conijn also has some criticisms. 'It would have been nice if more attention had been paid to the future capital of consumers. And it is rather too easily concluded that income will decline on retirement. Quite possibly, this decline will not be so severe. Some people may have capital or sources of income we are not aware of, and thus will not have a problem to repay. Having this knowledge could put the interest-only mortgage issue in a more positive light.
I also hoped to see the AFM be more explicit regarding the solution. Capital accumulation and early repayment are both mentioned, but in my view I see more potential in gradual repayment. The consumer will then in any case know that repayment is occurring. Capital accumulation involves additional risk. No one can give any assurance that these funds will generate a good return.'
Illusion
On his departure as an endowed professor, Conijn says that knowledge is sometimes illusory. 'By this I mean that everything has to be considered in context and any problem has to be reassessed from time to time. For example, interest-only mortgages involve many variables. It would make a difference if people moving up the housing ladder are no longer able to arrange an interest-only mortgage. A collective plan from the mortgage providers would also be helpful. As the supervisor, the AFM can play an important part in this to see whether the plan produces the desired results.'