In the current political debate on mortgage interest deduction, it is often argued that phasing out the scheme would help first-time buyers gain more access to the housing market. Matthijs Korevaar, Associate Professor in the section Finance at Erasmus School of Economics, takes a more critical view. According to him, it is precisely first-time buyers with lower incomes who benefit the most from the deduction, since they deduct a relatively large amount of interest compared to their income.
Questioning political reasoning
The Christian Democratic Appeal (CDA) argues that abolishing the deduction would improve the position of first-time buyers, but in an interview with the Dutch morning newspaper NRC, Korevaar challenges this line of reasoning. Scrapping the deduction would deprive starters of their main financial advantage, without automatically leading to more affordable housing. Their borrowing capacity would shrink, while they would still be willing to spend a significant part of their income on housing.
An alternative: raising the imputed rental value
Instead of fully abolishing the mortgage interest deduction, housing market economist Korevaar suggests raising the so-called eigenwoningforfait (imputed rental value). This is paid by all homeowners, while the benefits of mortgage interest deduction vary per situation. Such a measure would preserve the advantage for first-time buyers, while shifting more of the burden to households that already deduct less interest.
Not a silver bullet for the housing shortage
Korevaar stresses that phasing out mortgage interest deduction is in any case not the golden solution to the housing shortage. What is really needed are substantial investments in new housing construction. According to him, the debate on mortgage interest deduction should therefore be seen in a much broader context.
- Associate professor
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For more information, please contact Ronald de Groot, Media & Public Relations Officer at Erasmus School of Economics: rdegroot@ese.eur.nl, +316 53 641 846.
You can download the full article from NRC, 3 September 2025, above (in Dutch).
