“I think banks do not have all the responsibility for improved living, but we do have a big responsibility. It is one of the transformations of our time. As banks, we have many houses in our portfolio and good access to clients, so we should leverage on that to contribute to the required energy transition”.

We invited Huib De Mulder, Director Housing at Rabobank, for this year’s last session of The Banking Scene Afterwork. I was amazed by the inspirational talk we had, unexpectedly around all the challenges on the Dutch housing market instead of a technical discussion on the transformation of the mortgage industry.

Mission-driven Living Strategy

Rabobank’s mission is “Growing a better world together” and stems from their cooperative DNA and the bank’s foundation: farmers without access to money that started lending to each other.

With housing being one of the priority topics in today’s societal transitions in the Netherlands, Rabobank looks beyond the traditional banking services to contribute to a solution.

Huib asked the audience: “Are we just about banks selling mortgages, or do we see a broader role for us in society and look at it with a different lens if there is an issue?” Rabobank is well placed to consider the complete spectrum of tensions in the housing market.

About 10% of the newly built houses in the Netherlands is developed by Bouwfonds Property Development (“BPD”) and with it’s “rental fund of affordable houses” also a real asset investment management division of Rabobank. Huib: “BPD brings different knowledge and the skills within the bank. They make us think about property development and how we can do that in a good way.”

Stimulating house improvements

Huib explained that Dutch houses are granted a sustainability grade from G to A++++ when the house is bought, but the system lacks an incentive for home owners to apply for a new grade after renovations. This approach risks missing the point of the regulation, according to Huib: “Should you focus on having a green portfolio of making the Netherlands or Belgium more sustainable or should you focus on G labels and improving them instead of only getting in the good labels?”

Many Dutch banks started offering green mortgages, mortgages with a discount based on the sustainability rating of the house. On top of that, Rabobank trained their advisors (both colleagues and intermediaries) to help their customers understand how to reduce the customer’s carbon footprint of living.

Several Dutch banks started offering house scans to get a ‘sustainability picture’ of a house in a few minutes, including suggestions to improve the house's rating. Rabobank works with homeQgo. They do the scanning and also matchmaking with third-party services providers to take care of the installation of the desired improvements.

Customers often see these improvements as an alternative for the savings account: investment in low-interest times to reduce the energy cost in the long run. An additional upside is that having a more sustainable mortgage portfolio increases the value of that portfolio, resulting in a lower risk for the bank.

The bank closes 2021 with +30% of mortgages that are sold with energy-saving measures (compared to 5% two years ago).

Rabobank provides this service free of charge.

Huib: “We have a social mission. So indirectly, if we do this right, and people recognise Rabobank as a social bank, this will generate additional income because people are less hesitant to buy a mortgage with us as they are certain they are also doing something good for the world.”

Rabobank’s Answer to the Heated Housing Market

A second challenge in the Netherlands, and equally in Belgium, is inclusion: how to keep the purchase of a house reasonably accessible? The low-interest rate, in combination with scarcity and fiscal measures to stimulate the purchase of a home, created a boom in housing prices.

The biggest issue is the scarcity of houses in specific regions. Rebalancing this supply and demand is a multi-year process to reallocate open space for living.

Rabobank hopes to overcome this challenge with projects such as Smartbuilds. Smartbuilds is a new project, a spin-off that will build houses for a limited time of 15 to 30 years. Because of the short term, they believe the houses can be built in 2 years instead of going through the 7-year process.

Smartbuilds is currently looking for municipalities that are willing to partner.

As a cooperative, Rabobank will ensure a positive business case while keeping the market price under control instead of optimizing it for the highest possible return.

Tomorrow’s Dilemmas of a Sustainable Housing Market

Huib believes that the housing market requires more flexibility and creative thinking if we want to overcome tomorrow’s challenges.

He pointed to the issue of the rising sea levels, asking the audience whether it is wise to keep building houses below sea level.

How can we structurally overcome demographic shifts and the resulting change in the supply and demand of houses? He referred to Randstad, and an increasing demand for houses, where Limburg demand is much lower.

A second challenge is the generational one. People often buy a house with a size that fits the entire family. But it is worth the size when kids become adults and look for their own place to live? Rabobank has a feature for customers who ask themselves these questions.

These are all tough questions, which are mostly considered policy questions. Having a bank with a specific department to reflect on purely these dilemmas is, to me, a great example of “Banking for Good”, on how to contribute to a better world for humans and society.

Conclusion

I read a lot about Rabobank’s projects in the housing market, projects of which I thought: side projects. Nothing could be further from the truth. The way Rabobank is paving the way to more sustainable living and accessible living is an inspiration for many.