AMSTERDAM (Reuters) - Dutch election campaigning turned to the sinking housing market on Friday, when Prime Minister Mark Rutte tried wooing voters with vows to maintain a subsidy for mortgage borrowing.
With mortgage debt of 670 billion euros, or 111 percent of economic output, the Netherlands has the highest home loan-to-GDP ratio in the European Union. A steady decline in housing prices since 2008 has hit consumer spending and economic growth.
Concerns about the high debt ratio, weak economy and exposure to the euro zone crisis were cited by Moody’s ratings agency as the main reasons for a possible downgrade of the Netherlands’ triple-A credit rating.
Rutte’s pro-business Liberal Party is leading opinion polls five days before the September 12 vote, whose buildup has been dominated by the euro zone crisis, rising unemployment and painful austerity measures.
In an interview with the mass-circulation De Telegraaf newspaper, Rutte said his party would guarantee to maintain tax deductibility for mortgage interest payments on existing loans, which save most homeowners hundreds of euros per month.
The comments were an attempt to keep his party’s edge over its closest rival, the left-of-center Labor party, which has surged in recent opinion polls due to strong television appearances by its leader, Diederik Samsom.
Dutch housing prices have fallen nearly 15 percent in the four years since the global financial crisis began and are projected to continue sliding through 2014, hurting the chances of economic recovery.
Reporting By Anthony Deutsch; Editing by Kevin Liffey