Fixed-rate mortgages at a new low – forecasts for 2024 with uncertainty
Published: Tuesday, Dec 12th 2023, 09:00
Updated At: Tuesday, Dec 12th 2023, 09:01
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Prices for fixed-rate mortgages are continuing to fall. Since the high in May, interest rates have been falling continuously. Fixed-rate mortgages are now even cheaper than a Saron mortgage. How things will continue in 2024, however, depends on many factors.
While an average of 3.07 percent still had to be paid for a two-year fixed-rate mortgage in mid-June, interest rates are now only at 2.26 percent, the online comparison service Moneyland calculated on Tuesday. There has also been a sharp fall in five- and ten-year mortgages, from 3.02 to 2.19 percent (five-year) and from 3.04 to 2.31 percent (ten-year). "This is a striking drop in mortgage rates for such a short period of time," Felix Oeschger, analyst at Moneyland, is quoted as saying.
Saron-Hypothek teurer
The development in comparison to Saron mortgages is similarly remarkable. At the end of October, these were as expensive as fixed-rate mortgages for the first time in a long time. Fixed-rate mortgages are now ahead for the first time. This is because average Saron mortgages have remained unchanged at 2.61 percent since October due to the key interest rate remaining unchanged. This means that two-year fixed-rate mortgages are currently 0.35 percentage points cheaper, five-year mortgages are 0.42 percentage points cheaper and ten-year mortgages are 0.30 percentage points cheaper, according to Moneyland.
"However, this should not lead to the conclusion that fixed-rate mortgages are now generally preferable," said Oeschger. This is because with a fixed-rate mortgage taken out today, the interest charge remains constant over the entire term, whereas with a Saron mortgage it could fall over the next few years.
SNB likely to leave interest rates unchanged
According to a Moneypark survey of around 50 mortgage providers, 90 percent of respondents expect interest rates to remain unchanged at 1.75 percent for the Swiss National Bank's (SNB) key interest rate decision due on Thursday, meaning that Saron mortgages will remain at the current level. In the case of fixed-rate mortgages, the survey participants expect interest rates for shorter terms of up to five years to remain unchanged until the next interest rate decision in March. Meanwhile, higher fluctuations and a downward trend in interest rates are expected for longer terms.
The comparison service Comparis expresses a similar view. The experts expect only a sideways movement with a slight downward trend for medium and long-term mortgage rates in 2024. In the short term, Comparis does not expect any major changes for the time being. Specifically, Comparis expects five-year fixed-rate mortgages to range between 1.80 and 2.25 percent by the end of 2024. Ten-year mortgages are likely to be between 2.00 and 2.40 percent.
Outlook with uncertainties
Overall, they all emphasize the many uncertainty factors for the further development of interest rates. If, for example, the economy were to weaken significantly contrary to expectations, the SNB could be forced to cut interest rates earlier, according to Moneyland. On the other hand, unexpected surges in inflation with a necessary tightening of monetary policy are also not impossible.
The monetary policy of other central banks is also important. "I therefore assume that the SNB will wait with interest rate cuts until other central banks also lower interest rates," says Moneyland expert Oeschger. Moneypark's survey participants also continue to see inflation, a possible recession and the general economic situation in Europe as the greatest uncertainties for interest rate developments.
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