Amsterdam - The Dutch government Friday extended conditions of a special insurance for home owners temporarily until late 2010, in an attempt to stimulate the real estate market. The insurance guarantees that mortgages for homes of up to 350,000 euros will be paid if - under certain circumstances - the owners can no longer meet their financial obligations.
People who purchase the special insurance, are also entitled to a mortgage with lower interest rates.
"The insurance is not a miracle medicine," minister Eberhard van der Laan of integration and city neighborhood affairs said following the meeting.
Previously, only people who bought a home of up to 265,000 euros were able to apply for this type of insurance, which has existed for many years and was originally to help low-income and young buyers.
But speaking in parliament on Wednesday, Finance Minister Bos gave in to ongoing demands from lawmakers requesting him to expand the conditions to include homes of up to 350,000 euros.
This would enable most middle-class Dutch nationals to purchase a home with the insurance. The new measure is meant to stimulate the residential real estate market which has come to a near-standstill.
In the first three months of 2009, Dutch home prices fell by 3.1 per cent, marking the third consecutive quarter of price drops.
The volume of sales dropped dramatically from 33,000 in the first quarter of 2008 to 19,000 in the same quarter this year. The demand in new homes fell more than 70 per cent.
