Competition for home buyers is intensifying among Belgium's major banks as rising interest rates and high inflation have driven mortgage applications to record lows, l'Echo reports.
"The competition is stronger between the banks," said Cedric Matte, Director General of Retail Banking at CBC. "We have to fight. Our margins are under pressure. Our goal is to maintain our market share despite the decrease in the volume of activity. And we're getting there."
Mortgage rates in Belgium have risen sharply over the past year, from an average of 1.5% at the start of 2022 to between 3% and 4% today. This has led to a 47% decline in mortgage applications over the first two months of this year (relative to the same period last year). This severe drop has forced many banks to trim their rates and issue longer-term loans in a bid to encourage home purchases.
Nevertheless, some mortgage lenders insist that despite the current difficulties to attract customers, they will not enter a "rate war" with their major rivals.
"The market is slowing down and everyone wants their piece of the pie," said Marc Delforge, the Head of Lending Marketing at BNP Paribas Fortis. "We are fighting for the customers. But our acceptance criteria have not changed. The refusal rate remains the same. And we are not getting into a rate war."
'No concern on our part'
Despite the dramatic collapse of the mortgage market, mortgage lender employees interviewed by l'Echo remained confident about the sector's long-term financial stability.
"This decline does not endanger bank results," said Delforge. "There is no concern on our side. We are not at a standstill and activity remains strong. I would remind scaremongers that we are coming out of a period of seven to eight years of continuous growth."
His remarks were echoed by Matte. "There is no danger for us. Mortgage loans are granted on a long-term basis. They generate income for many years."
However Matte conceded that only richer Belgians are likely to benefit from the growing competition among mortgage: "Customers who have greater means, who suffer less from the energy crisis and inflation, are in a strong position. They can afford to negotiate prices and financing conditions."
More promisingly, Delfore said that he expects natural market mechanisms to correct eventually. "What is happening now is not unhealthy. Interest rates are rising, demand is falling and we expect prices to fall slightly, which will make it easier to access property."
