Dutch pension manager PGGM is backing a residential mortgage strategy managed by Syntrus Achmea Real Estate & Finance.
The €186bn PGGM manager’s membership organisation, PGGM&Co, has backed the venture, which will offer €3bn over the next five years to 2.5m PFZW health and welfare pension fund members.
The amount being provided is thought to be the largest ever offered in the Dutch market and comes at a time of increased restrictions on traditional bank lending.
Syntrus Achmea, active in the residential mortgage sector for 20 years, is understood to be targeting net returns of around 8% from the investment.
The manager has based its €3bn target on an average mortgage of €200,000 and by providing 3,000 residential loans a year.
Its creation of a standalone provider, branded as Attens Hypotheken, has been two years in the making.
As previously reported, PGGM and APG have said their clients’ interest in the residential mortgage sector was likely to increase if a proposed national body issuing state-backed mortgages was given the go-ahead.
The latest move by PGGM comes more than two years after a working committee began assessing the feasibility of such an institute.
The government-backed Nationale Hypotheek Instelling (NHI) scheme – an initiative to take Dutch mortgages and securitise them for institutional investors as the federal agency Fannie Mae does in the US – was first mooted in 2013.
In September, however, the Dutch government scrapped plans for the NHI after the parties involved in the project failed to agree on how best to address the European Commission’s decision that the scheme would be tantamount to state aid.
Many Dutch institutions had been ploughing money into various mortgage bond funds anyway.
PGGM&CO members have requested that the focus of Attens Hypotheken be on long contracts with stable interest rates.
Annuity, linear and interest-only mortgages will be offered by the provider.
Bart Blanken, chief marketing officer at PGGM&Co, said: “If you’re working in the health and welfare sector, having your own house is usually a struggle to finance.
“Because of this, PGGM&Co has contributed to the launch of Attens Hypotheken, to open doors for people who work in the health and welfare sector.”
Wages from irregular working hours and income from temporary, or zero-hours contracts, can be incorporated in the calculation of the maximum mortgage sum provided.
Parents of first-time home buyers can also sign for the mortgage, with borrowers receiving an interest rate discount on part of the mortgage when they buy an energy-efficient house, or use energy-saving measures.
Syntrus Achmea chief executive Henk Jagersma said: “Residential mortgages are an interesting investment for pension funds, as they provide good, stable returns for a relatively low risk.
“As a result, they are a good alternative to low-yielding bonds.”
The move takes Syntrus Achmea to almost €9bn of residential mortgage assets under management, having so far invested €5bn.