Euribor-linked mortgages

To ensure healthy business operations, the bank needs to be able to change the surcharge. In response to market conditions, the surcharge for mortgages with the Euribor interest rate was increased in 2009 and 2012. The bank has since also lowered the surcharge on a number of occasions for the same reason.

The surcharge was initially increased in 2012 for all customers with a mortgage based on the Euribor interest rate. In November 2012, the surcharge increase for former Fortis customers with quotes stating ‘vaste opslag’ [fixed surcharge] was reversed. The surcharge increase was also reversed in a number of cases in which individual agreements had been made. The surcharge increase was not reversed for any other customers.

You pay a surcharge in addition to the 1-month Euribor interest rate. This surcharge is used to cover our costs and consists of the following elements:

Surcharges based on capital market and capital costs developments
On top of the basic rate, we also pay surcharges if we buy money on the money and capital market over a longer period of time. ABN AMRO also incurs costs for keeping the money (capital). These capital costs are also included in the interest we charge.

Running costs
The running costs are the bank’s own operating costs. These costs are both non-recurring and recurring costs.

Non-recurring costs include marketing and staff costs for assessing credit applications and compiling files.

Recurring costs are costs incurred for managing a mortgage portfolio, such as risk management, arrears management and monthly interest collection costs.

Individual risk surcharge
This surcharge is part of the individual risk ABN AMRO runs for its customers’ loans. The surcharge amount depends on the ratio between the value of the collateral and the loan amount.

Profit surcharge
This surcharge goes towards financing future business activities.

The main reasons the surcharge can increase or decrease are our ‘liquidity surcharge’ and our ‘capital costs’.

Liquidity surcharge
The money we lend to our customers must first be borrowed from investors. Customers need to be able to trust that a bank holds sufficient funds to cover a long period of time, which is why we borrow money for periods longer than one month. Investors also want a higher interest rate than the Euribor interest rate. The same is true of our savings account holders. The higher interest rate we pay for our loans is called the ‘liquidity surcharge’.

Capital costs
Banks must always own part of the money they lend. They have to reserve funds for this. We are obliged by law to increase our reserves, meaning that we as a bank have a strong balance sheet, but also incur additional ‘capital costs’.

We review our charges each quarter and decide whether your surcharge can be lowered or needs to be increased. Any changes to your surcharge will take effect from the beginning of a quarter i.e. 1 January, 1 April, 1 July or 1 October. You will be notified of any such changes in advance in your interest confirmation letter. The surcharge can change by a minimum of 0.1% and a maximum of 0.35%, meaning that there are no longer unexpected, significant changes to your surcharge.