Answer to written questions by Member Van Baarle (DENK) on the report that the bank can now look up your student debt
Date November 12, 2021
Subject Answer to written questions by Member Van Baarle on the report that the bank can now look up your student debt
I hereby send you, also on behalf of the Minister of the Interior and Kingdom Relations and the Minister of Finance, the answers to the questions of Member Van Baarle (DENK) on the news that the bank can now look up your student debt.
The questions were submitted on Oct. 13, 2021, with reference 2021Z17853.
The Minister of Education, Culture and Science,
Ingrid van Engelshoven
1. Are you familiar with the message 'Need a mortgage? Bank can now collect your student debt'?
Yes.
2. Is it true that in the context of mortgage applications, banks will in the future have the possibility, if the customer gives permission, to request data on student debts from the Department of Education (hereinafter: DUO)? What do you think of this development?
For several years, consumers have been able to provide some of the data needed to apply for a mortgage in a different way. This is by giving permission to an app, such as Ockto or iWize, to retrieve and share certain data with the mortgage adviser and lender. This option was already available for data from the UWV, Mijnpensioenoverzicht and MijnOverheid. Until recently, (former) students had to request the necessary data about their student debt themselves via DUO and pass it on to the mortgage lender. Since Oct. 11, it has also been possible for the (former) student to submit the data to the mortgage provider via the above-mentioned apps at DUO. Such an initiative can lead to more convenience. This initiative does not change the rights and obligations of (former) students and lenders, but only affects the way in which this obligation can be met.
Citizens have the right under the General Data Protection Regulation (AVG) to access their own personal data from the government digitally. They do not have to provide further justification for the purpose for which they want to view the data. Citizens can then decide for themselves to share this data with third parties, as in the case of a mortgage application. I have already addressed this development in previous answers to Parliamentary Questions1 by Member Futselaar.
3. Do you share the view that this makes it even more difficult for first-time buyers to purchase a home?
First-time buyers' search for an affordable home to buy has become increasingly complicated in recent years due to soaring prices. However, I do not share the view that this initiative makes it more difficult for first-time buyers. In fact, financial obligations, such as student debt, have always affected the amount of the maximum mortgage. This is unchanged by this possibility. Retrieving data from DUO via an app can lead to more ease of use in providing information on student debt. This could make applying for a mortgage easier for consumers.
4. Do you share the concern that requiring customers to consent to viewing this data will in practice amount to coercion, because lenders will make it a requirement? How will you prevent this?
I do not share this concern. In fact, this initiative is part of a broader development that improves consumer services. This by simplifying the supply of data needed for a mortgage. (Former) students are already required to declare any student debts when applying for a mortgage. This data can now also be submitted directly to the lender via an app. A number of lenders offer their customers this option. A lender may impose requirements on how certain data must be supplied. For example, because this reduces the cost of the application process. At present, there is no evidence that lenders require (former) students to submit student debt data only via the Hypotheek Data Netwerk (HDN) app.
5. Which agencies or companies can access the said app to access student debt?
Agencies or companies cannot request citizen data from DUO. Citizens give permission to share certain data with the lender through the app.
6. What is the Cabinet position on the registration of student debt and the inclusion of student debt in the context of mortgage applications?
The government considers it important that mortgage loans be provided responsibly. For responsible lending, the lender has a legal obligation to take financial obligations such as student debt into account when determining the maximum mortgage. The (former) student is also obliged to declare any student debts when applying for a mortgage. This is because the repayment of a study debt weighs on the disposable income of a (former) student. It is therefore also in his or her interest to honestly declare any study debt when applying for a mortgage. This prevents the mortgage charges from becoming too high, resulting in possible payment problems. For study debts, a lower weighting factor is applied to a mortgage application than for consumer loans due to their special nature with the associated social repayment conditions.
DUO keeps track of the study debt of every (former) student due to the implementation of study financing. The (former) student can get a personal insight into the amount of study debt and any repayments through My DUO. The keeping of study debts by DUO and offering a personal insight is a substantially different situation than a registration with, for example, the Bureau Krediet Registratie (BKR). The government will not proceed with a BKR registration for study debts.
7. Do you recall your statements regarding the registration of study debt with the Bureau Krediet Registratie (hereafter BKR), namely that this would be a deterrent? Do you share the opinion that the developed app with which study debt can be requested by lenders, in fact amounts to something similar to a BKR registration? If not, why not?
The app will allow required data to be submitted with a mortgage application in a more user-friendly way, if permission is given by the mortgage applicant. The app does not change the current practice of applying for a mortgage, where it is already mandatory to declare any study debts. Study debts are also not recorded in a different way than before. Therefore, it is not equivalent to a BKR registration.
8. When the loan system was introduced, what exactly was promised regarding the inclusion of student debt in mortgage applications? Can you explain in detail whether the promises made by the Cabinet at the time were kept? Was it promised at the time that student debt would not be taken into account when applying for a mortgage? If not, what was promised?
When the loan system was introduced, the weighting of student debt in mortgage applications was discussed at length. This was the case in the report , the further report and during the discussion in the Lower House . There was no promise then that study debts would not be taken into account when applying for a mortgage. In the context of responsible lending, it would be unwise not to include them in determining the maximum responsible mortgage. Student debt had a weighting factor of 0.75% prior to the introduction of the loan system. Reports and discussion indicated that agreements had been made with the Dutch Banking Association and the Financial Markets Authority (AFM). It was agreed that the study advance provided grounds to lower the weighting factor to 0.45%. This reduction was possible because the monthly costs were roughly halved by the extension of the repayment period and by the more social repayment conditions. Until Jan. 1, 2021, the weighting factor remained the same at 0.45%. As of Jan. 1, 2021, an even lower weighting factor of 0.35% applies to study debts under the loan system, following advice from Nibud. This reduction is in response to low interest rates on study debts.
9. In what way does student debt currently weigh in on lending? What weighting factor does student debt have? How does this weighting factor compare to other weighting factors? Does the government consider this weighting factor to be conducive to the chances of first-time home buyers?
The weighting factor relative to the original principal amount of a student debt or other credit, w ith respect to the monthly burden of the debt to be taken into account when determining the maximum mortgage. The weighting factor in the provision of mortgage credit will be anchored in the Mortgage Credit Regulations as of January 1, 2021. Prior to that, Nibud conducted research into the responsible inclusion of student debt in mortgage applications. Based on this, the weighting factor for study debt in 2021 was set at 0.65% for a debt under the old system and 0.35% for a debt under the loan system. Study debts under the loan system have a lower weighting factor because the repayment time and thus the monthly costs are much lower than for study debts under the old system. Given the interest rate of currently 0% on study debts, this is the lowest weighting factor deemed justified by Nibud. As the Minister of the Interior and Kingdom Relations also informed your Chamber in the letter about the loan standards 2022 , it will therefore remain the same for 2022.
The weighting factor for student debt is low compared to other weighting factors. In comparison, for consumer credit the weighting factor is 2%. The difference is due to the special nature of study debts with the associated social repayment conditions. When determining the maximum mortgage, any other financial obligations such as alimony obligations and ground rent payments are also taken into account. The idea behind the weighting factor is to pursue responsible lending. Starters have a difficult time in the housing market, and recent research by the AFM also shows that starters in particular are potentially extra vulnerable. That vulnerability would only increase if debt is not properly weighted in lending.
10. Can the Cabinet explain how the inclusion of student debt in lending affects the chances of first-time buyers to purchase a home? Are statistics on this available?
No statistics are available on the impact of student debt on first-time home buyers' search for housing. However, I believe that first-time buyers do not have it easy in the housing market. Housing supply is limited and competition is fierce. House prices are rising fast and the maximum mortgage is determined by many factors, including the level of income and taking into account financial obligations such as student debt. However, I also think it is important for first-time buyers to take out a responsible mortgage.
The government wants there to be enough housing for first-time buyers. Therefore, the construction of additional housing is top priority. However, those homes will not be there right away. Therefore, we also take measures to help starters buy a home in the short term. For example, by exempting first-time buyers up to the age of 35 from transfer tax (for a home up to €400,000) and by improving information for first-time buyers on the housing market.
By the way, the inclusion of student debt when applying for a mortgage is not specifically aimed at first-time buyers; move-up buyers with student debt must also declare it.
