Fixed-rate mortgages more attractive than Saron mortgages for the first time
Published: Thursday, Jan 4th 2024, 06:21
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Interest rates for fixed-rate mortgages in Switzerland fell once again in the fourth quarter. However, after the Swiss National Bank (SNB) paused interest rates again in December, the conditions for Saron mortgages did not change.
According to the quarterly mortgage barometer published by Comparis on Thursday, the realization seems to be gaining ground that interest rates have peaked for the time being. As the inflation rate has been well below the 2 percent upper limit targeted by the SNB for months, the market is already speculating on the first key interest rate cuts.
"The hope that key interest rates will not continue to rise or will fall is reflected in significantly falling capital market interest rates and swap rates, which are making bank refinancing significantly cheaper," Comparis expert Dirk Renkert is quoted as saying in the press release. "This means that fixed-rate mortgages are now significantly more attractive than Saron mortgages for the first time."
Accordingly, the proportion of Saron mortgages taken out with Comparis mortgage partner HypoPlus has fallen significantly in the last three months. In the first 9 months of the year, around a quarter of mortgage customers opted for a Saron mortgage, but in the last 3 months this figure has fallen to around one in six.
Greater demand for medium maturities
In contrast, the proportion of 4 and 5-year fixed-rate mortgages increased significantly. Around one in five people opted for fixed-rate mortgages with medium terms in the first nine months of the year. In the last 3 months, this proportion increased to around a third of all contracts. The proportion of 10-year and longer-term fixed-rate mortgages remained virtually unchanged at around 40 percent.
According to Comparis, the benchmark rate for fixed-rate mortgages with a term of 3 years was 2.08 percent on December 20, 2.10 percent for 5 years, 2.22 percent for 10 years and 2.32 percent for 15 years. The top interest rates determined by HypoPlus for the same key date were even 0.4 to 0.5 percentage points lower.
The benchmark rates calculated by Comparis are published but still negotiable average interest rates from around 50 mortgage institutions.
The Saron (Swiss Average Rate Over Night) remains unchanged at around 1.70 percent. However, the banks' interest margin is added on top of this, which according to Comparis is around 0.6 to 0.7 percentage points. For a Saron mortgage, you currently pay around 2.3 to 2.4 percent interest per year.
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