The Swiss Times - Swiss News in English

Mortgage interest rates have risen since the beginning of the year

Mortgage interest rates have risen slightly since the beginning of the year and are currently at or just below their high for the year. However, mortgages could become cheaper again later in the year depending on the development of inflation and key interest rates.

The average interest rate for two-year fixed-rate mortgages has risen to 2.29 percent from 2.18 percent since the beginning of the year, according to a press release issued by Moneyland.ch on Wednesday. According to the comparison service's mortgage index, five-year and ten-year fixed-rate mortgages are also slightly more expensive than at the start of the year, averaging 2.23 and 2.33 percent respectively.

This means that interest rates for two-year fixed-rate mortgages are at a new high for the year, while interest rates for five- and ten-year fixed-rate mortgages are only just below this level, the report continues. Meanwhile, Saron mortgages have been more expensive than fixed-rate mortgages for several months, which is an exception in historical terms.

Key interest rate cuts possible

However, this could change as the year progresses: The majority of the market is assuming that the US Federal Reserve will announce another interest rate pause today, Wednesday, and that the Swiss National Bank (SNB) will also keep interest rates constant for the time being on Thursday. However, key interest rates are likely to be cut later this year in Switzerland as well as in Europe and the USA.

Such interest rate cuts are already priced into the current interest rates for fixed-rate mortgages, it is said. It is therefore the most likely scenario that interest rates for fixed-rate mortgages in Switzerland will move sideways in the coming months.

In contrast, the interest rates for Saron mortgages depend directly on the current Saron or a few months ago and would therefore react promptly to interest rate moves by the central banks. "The fact that many economists are expecting three interest rate cuts this year suggests that Saron mortgages will be significantly cheaper at the end of the year," says Benjamin Manz, Managing Director of Moneyland.ch.

©Keystone/SDA

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