Banks have seen their profit margins on mortgages shrink considerably over the past months because of additional competition from large institutional investors in the market.

Figures from Amsterdam university show that the profit margin of 0.9% at the beginning of this year has now dropped to 0.3%, the Financieele Dagblad reports.

‘This is good news for the housing market and for people with a mortgage,’ the university’s Maarten Pieter Schinkel told the paper.

‘It is a bit too early to draw a firm conclusion, but the drop fits into the picture of more investors entering the market,’ he said.

Stable

The fall in profit margins is keeping the cost of a mortgage stable, the FD says. While market interest rates have increased from 0.3% in January to 0.8% in August, mortgage interest rates have remained roughly the same.

Competition in the market is increasing fast since pension funds and insurance companies began offering mortgages.

Mortgage provider Munt Hypotheken told the paper it reached the milestone of €1bn in mortgages in May. ‘And this week we reached €2bn,’ Munt’s Jeroen van Hessen said.