To lend money is becoming cheaper. Mortgage rates in the Netherlands have been decreasing for years and mostly governments take advantage. Professor Casper de Vries, holder of the Witteveen Chair of Monetary Economics at Erasmus School of Economics, gave his opinion.
The relative big amount of elderly people amongst the working people results in a high demand for bonds. Elderly tend to have more savings and close to their retirement they are less risk seeking with the money they invest. This high demand results in a lower interest, thus de Vries.
The interest rates decreased even more due to the European Central Bank, who also bought bonds. According to de Vries, in some markets the Central Banks could be held for monopolists. By buying the bonds they aim to chase inflation, but in reality the prices are increasing and the interest is going down.
The solution? Lowering government spending and taxes. Governments are the ones who should handle.
