Cabinet in Accord with Pension Funds on Mortgage Investments
THE HAGUE, 29/08/13 - Pension funds and insurers are to invest in mortgages. A National Mortgage Institute (NHI) and a National Investment Institute (NHI) are to be set up.
Representatives of the cabinet, pension funds and insurers have “taken very big steps” towards setting up a NHI. This is in due course to take over some tens of billions of euros in mortgages held by banks, Het Financieele Dagblad reported Wednesday.
The NHI will be financed by pension funds. Within it, they will buy bonds guaranteed by the State. Through this manoeuvre, the banks will gain more space. Their balance sheets will be healthier and they will be able to attract cheaper finance. And mortgage interest rates will as a result be able to come down, from 4.25 percent on a 10-year mortgage at present.
The negotiations, which have been underway for some years, were intended to persuade insurers and pension funds to increase their investments in the Dutch economy. For central government, the state guarantee is an obstacle. But Economic Affairs Minister Henk Kamp has persuaded his Finance counterpart Jeroen Dijsselbloem, said a source. "The result is better than expected,” said another insider.
On the question of the state guarantee, law firm Allen & Overy was asked to look into whether it is ‘Brussels-proof’. “Allen & Overy has given positive advice,” according to the source.
As well as an NHI, a National Investment Institute will be set up with the State providing one-third of its equity, which will invest in all kinds of – often regional – projects. Pension funds and insurers will also have to participate in the fund, one-third each, say the sources.
Additionally, the small companies MKB Fund already presented earlier by the insurers led by Delta Lloyd, will be increased, though by how much is not known. Pension funds will also have to invest in this fund for small business credits.
According to a source from the pension sector, a statement has been included saying that pension funds cannot be forced to invest. The guideline for them is always stable returns.