Finding a loan is becoming more difficult for mortgage customers
Published: Friday, Jun 28th 2024, 11:20
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The Swiss mortgage market has been in flux since the SNB interest rate turnaround. While a shakeout can be observed among mortgage brokers, the major bank UBS is apparently keeping a low profile in this market at present. The search for offers has generally become more difficult for mortgage customers.
The Swiss National Bank's (SNB) move away from negative interest rates has had the most visible consequences for mortgage brokers. The turnaround in interest rates has led to a significant shakeout in the young sector: online provider Hyposcout and former Postfinance subsidiary Valuu are no longer on the market for private mortgage customers, while market leader Moneypark has been taken over and restructured by insurer Helvetia.
Valiant Chairman Markus Gygax put it drastically: "Mortgage brokers have largely disappeared," he said at an investor event a few days ago.
Banking expert Andreas Dietrich goes much less far. However, the professor at Lucerne University of Applied Sciences and Arts (HSLU) believes that the momentum in the sector has obviously been lost following the rapid growth in the negative interest rate era.
No longer a fixed-term deposit alternative
The fact that the mortgage business has become significantly less attractive for insurers and pension funds with the turnaround in interest rates has certainly also contributed to this. In the negative interest rate era, financing mortgages was still a welcome alternative to loss-making bonds and fixed-term deposits for these "non-banks".
However, this has also shown that the mortgage business does involve some effort and risks, says Adrian Wenger, mortgage expert at VZ Vermögenszentrum. "You need to collect interest, but you also have to deal with increases and terminations of mortgages or initiate debt collection proceedings against defaulting payers, for example." As a prominent example, Zurich Switzerland announced this spring that it would no longer be offering mortgages for the time being.
Cautious UBS
In addition, according to observers, UBS is currently holding back considerably in the mortgage market: In some cases, the big bank does not even want to conclude new business with existing customers, observes Wenger from VZ Vermögenszentrum. However, banking professor Dietrich believes that it is hardly surprising that the big bank is initially taking a more defensive stance due to the streamlining of the CS portfolio. UBS has also been rather cautious in the mortgage market in recent years and has continuously lost market share.
However, UBS itself continues to see the mortgage business as an "anchor business with unchanged high priority", as the bank emphasizes. Mortgages are a central element of "holistic client advice". For upcoming renewals, an assessment is made on an individual basis as to whether the relevant financing criteria are met - the current interest rate and market environment also plays a role in this.
Fewer offers
Times have obviously also changed for mortgage customers in the new environment: A few years ago, a new customer looking for a mortgage loan could still obtain ten offers from ten financial institutions, but this has changed, says VZ expert Wenger: "Nowadays, customers often don't even receive an answer."
Dietrich also observes that the search for a loan has become more challenging, especially for customers who can only just afford a property or who have to use pension fund assets.
Higher margins
However, regulation is also likely to play an important role: The "final" implementation of the so-called Basel III rules is due to take effect at the beginning of 2025. This will lead to higher risk weightings for rather bad borrowers but lower risk weightings for good borrowers when granting loans - which means that less well secured loans will probably have to be backed by more equity than before. At the same time, the financial market supervisory authority Finma is also taking a closer look at lending, says banking professor Dietrich.
According to VZ expert Wenger, these developments also mean that banks no longer have to make major changes to their lending conditions. Interest rates in Switzerland are already falling again: "However, it can certainly be observed that some of the falling key interest rates are being absorbed by the banks' margin increases."
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