Mortgage product explained: ABN AMRO’s Interest Reflection Period

In the realm of mortgage financing in the Netherlands, ABN AMRO stands as one of the most prominent players in the market, offering a diverse range of mortgage products tailored to meet the needs of homebuyers. One notable feature that sets ABN AMRO apart is its inclusion of an interest reflection period on certain interest fixed terms in their offering. In this article we want to explain why it can be useful and how to take full advantage of it.

When you are applying for a mortgage you will need to choose a fixed-rate mortgage and or a variable-rate mortgage. Over the last two years we have seen something interesting happen to mortgage interest rates. A 10 year interest fixed term rate on a regular mortgage went up rapidly from 1.5% to almost 5%. At the same time the shorter fixed terms like 1, 3 or 5 years as well as the variable-rate went up even further in some cases. That having been said, what should you do if you expect that within the coming years the rates will go down again? If you lock your rate for long you will either be stuck with it or have to likely pay a penalty to switch. If you go for a variable-rate or 1 year interest fixed term you will pay a high price at the moment and possibly only later will you benefit in case the rates go down but who knows when that will be.


This is where the interest reflection period mortgage product can come into play. The interest reflection period is a distinctive feature embedded in certain ABN AMRO mortgage interest fixed terms, such as the 2, 3, 7 or 12 interest fixed term. It allows borrowers to periodically reassess and adjust their mortgage interest rates in the final 12 or 24 months of the interest fixed term. Unlike traditional interest fixed terms that lock in a specific interest rate for the entire term (which is also the case with ABN AMRO’s 5 or 10 year interest fixed term), the interest reflection period offers borrowers the opportunity to adapt to future changes in the financial landscape.


Whilst writing this article ABN AMRO has a variable-rate of 5,40%. Their 1 year rate is 4,44% and 5 year rate is 3,47% (short term rates higher then longer terms we called inverted rates because normally it should be the other way around). Now ABN AMRO also has a 3 year rate of 3,79%, which is only slightly higher then the 5 year rate but significant better than the variable-rate or 1 year rate. And this 3 year rate also has a reflection period of 24 months. This means that in the final 24 months you can switch it to a different interest fixed term or variable-rate without a penalty. In that regard for us it does not make sense to consider their variable-rate or 1 year rate at the moment but rather their 3 year rate with the interest reflection period. On top of that we can also split the whole loan into different loan parts with a 3 year rate with the interest reflection period (giving you multiple options later) or after the first year is completed to switch it once more to a 3 year rate with an interest reflection period.


So if market rates have decreased, borrowers may benefit from lower interest rates, potentially reducing their overall mortgage costs earlier. If the rates stay the same or go up, a borrower will likely wait till later in the interest fixed term or the final moment at the end to switch.


ABN AMRO’s mortgage products with an interest reflection period provides a flexible and adaptive solutions to its customers. This unique feature empowers borrowers to navigate changing market conditions, ensuring that their mortgage remains aligned with their financial goals. As with any financial decision, prospective borrowers are encouraged to engage with our advisors to fully understand the implications of the interest reflection period and make informed choices that best suit their individual needs.

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