Mortgages cheaper in the second quarter

Published: Thursday, Jul 4th 2024, 00:40

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Following the Swiss National Bank's (SNB) further reduction in key interest rates in June, interest rates for mortgages have also fallen further. In anticipation of further interest rate cuts, homeowners are also increasingly opting for mortgages with shorter terms.

When the SNB lowered the key interest rate to 1.25 percent from 1.50 percent in June, the interest rates for fixed-rate and Saron mortgages also fell immediately, as the comparison portal Comparis writes in its quarterly mortgage barometer published on Thursday. The gap between Saron and fixed-rate mortgages has narrowed slightly.

However, Saron mortgages are still slightly more expensive. "However, it will take at least one more interest rate cut by the SNB for Saron mortgages to become significantly cheaper than fixed-rate mortgages," Comparis financial expert Dirk Renkert is quoted as saying in the press release.

On average, the benchmark rate for ten-year fixed-rate mortgages fell by 0.08 percentage points to 2.18% at the end of June compared to the previous quarter. The average interest rate for five-year fixed-rate mortgages fell slightly less significantly to 2.09% from 2.13%.

The benchmark rates calculated by Comparis are published but still negotiable average interest rates from around 30 mortgage institutions.

Shorter terms on the rise

At the same time, mortgages with shorter terms gained in popularity. For example, contracts with a term of less than three years with Comparis mortgage partner HypoPlus more than doubled in the second quarter. One in five mortgages had such a short term. In the first quarter, it was just under one in ten.

At the same time, the proportion of fixed-rate mortgages with a term of four to six years fell from 40 percent to 30 percent. Ten-year fixed-rate mortgages also fell from almost 50 percent to 40 percent. In contrast, demand for seven- to nine-year fixed-rate mortgages was somewhat stronger, with their share rising from 4 percent to 12 percent.

"The second interest rate cut in a row raises hopes of further rapid interest rate cuts. Mortgage borrowers are therefore adopting a wait-and-see approach and do not want to commit to too long a term," said Renkert, assessing the development.

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