The turmoil in the financial markets affected the Dutch economy only slightly in 2007. Consumer spending increased in the Netherlands, which benefited the corporate sector, despite the higher interest rates in the money and capital markets and the decrease in consumer confidence.
Increased consolidation changed the banking landscape in the Netherlands considerably in 2007. Rabobank however, remained true to itself and this was part of the reason why many private clients opened Rabobank accounts and the numbers of corporate clients at the local Rabobanks grew.
The higher interest rates caused demand for mortgages to be lower in 2007. The number of mortgage switches was particularly lower. Partly as a result of this, the fierce competition in the mortgages market continued, leading to lower mortgage margins for the local Rabobanks. Due to the increased uncertainty and the rise of short-term interest rates, clients increasingly opted for mortgages with a longer fixed-interest term. Currently, more than 50% of the clients opts for a mortgage with a 15-year fixed-interest term or longer. As a result of the increasing interest rates, more savings-based mortgages were granted and the demand for investment-based mortgages declined.
From 1 January 2008, the Dutch government allows bank savings on easy fiscal terms. In response, Rabobank has developed two new banking products: the Rabo OpbouwHypotheek and the Rabo ToekomstRekening. The Rabo OpbouwHypotheek could be an interesting product for new mortgage clients. The Rabo ToekomstRekening enables pension savings or investments on easy fiscal terms for clients.
The positive economic development in 2007 caused a rise in sales in nearly all SME sectors. Competition in the corporate lending market continued unabated in 2007. At the same time, lending to the trade, industry and services sector grew by 16% tot EUR 46.1 (39.9) billion and corporate time deposits grew by EUR 9.4 billion to EUR 13.8 billion.
The food & agri sector generally showed favourable market conditions in 2007. Lending to this sector grew, and the number of farming and horticultural businesses declined by 3% to approximately 76,500, while the scaling-up process in both agriculture and horticulture continued. These conditions invited the interest from competitors, who are attempting to gain market share by offering highly competitive rates.