Companies borrowing less than they are repaying for over a year now

07/07/2010 15:00

Non-financial companies in the Netherlands repaid 3.0 billion euro more on outstanding loans than they borrowed in new loans in the first quarter of 2010. The credit crisis and uncertain economic prospects have led companies to borrow less than they repay for a year now. Households, too, are borrowing less. Their overall outstanding mortgage debt has been rising more slowly since 2005.

Net loans of non-financial companies

Net loans of non-financial companies

Long period of net repayments

In the last seven quarters, non-financial companies only borrowed more than they repaid in the first quarter of 2009. In the last ten years this is the longest period by far in which repayments exceeded new borrowing. It is the result of the credit crisis and the undecided future of the economy.

Companies borrow not only from banks, but also from foreign parent companies. In the first quarter of 2010, companies repaid 4.2 billion euro to their parent companies, while their net borrowing from banks amounted to 1.2 billion euro. This was the first time since the first quarter of 2009 that company bank loans exceeded loan repayments.

Households hesitant to take out mortgages

Because of the uncertain economic climate, the Dutch house market remains sluggish. The number of houses sold was much lower in 2009 than in 2008. The overall outstanding mortgage debt of Dutch households rose by 19 million euro net in 2009. This was only half the increase in 2008. The increase in the outstanding mortgage debt in the first quarter of 2010 was 4 billion euro.

Net increase in outstanding mortgage debt

Net increase in outstanding mortgage debt

Angelique Klinkers and Melanie Koymans