The average annual interest rate currently sits at 1.81 percent for two-year fixed-rate mortgages (FRMs), 1.79 percent for five-year FRMs, and 1.90 percent for 10-year FRMs. That means Swiss fixed-rate mortgages are currently much cheaper than they were at the beginning of June 2024 (refer to the Swiss Mortgage Index graph), when average annual interest rates sat at 2.31 percent (two-year FRMs), 2.33 percent (five-year FRMs), and 2.42 percent (10-year FRMs).
“The cost of 10-year fixed-rate mortgages has fallen by around half a percentage point in less than three months,” says moneyland.ch analyst Felix Oeschger.
Fixed-rate mortgages are cheaper than SARON mortgages
With an average annual interest rate of 2.09 percent, SARON mortgages are currently more expensive than fixed-rate mortgages. It is important to note, however, that the 2.09 percent average rate only reflects the current cost. That is because unlike FRMs, the interest rates of Saron mortgages are constantly changing in keeping with the SARON index.
Most market observers expect the Swiss National Bank (SNB) to lower its key interest rate by 0.25 percentage points at its September meeting. The resulting drop would put the average interest rate of SARON mortgages roughly on par with that of fixed-rate mortgages – assuming the average interest rates for FRMs remain the same.
Outlook
The general atmosphere has recovered somewhat since the turbulence first struck financial markets at the start of August. Currently, many market observers believe that the SNB will change its key interest rate both in September, and then again in December. That scenario should, at least in part, already be priced into mortgage interest rates, which would indicate a tendency towards further drops in fixed-rate mortgage interest rates.
“That said, economic and geopolitical risks remain high, and the chance of a substantial economic cooling cannot be completely ruled out,” observes Felix Oeschger. If that happens, central banks will likely react with major cuts to their key interest rates. That would put further downward pressure on Swiss mortgage interest rates.
The moneyland.ch Swiss Mortgage Index
The moneyland.ch Swiss Mortgage Index is based on the reference interest rates that mortgage lenders publish online. These are recorded by moneyland.ch twice daily. For 10-year fixed-rate mortgages, the index shows the daily average of the annual interest rates across 30 Swiss banks and insurance companies. Additionally, the mortgage index also shows the average interest rates for fixed-rate mortgages with other mortgage terms, adjustable-rate mortgages, construction loans, and SARON mortgages. In addition to recording the reference interest rates for each lender and mortgage type, moneyland.ch also calculates other key figures like the median, arithmetic average, mode, minimum, and maximum interest rates across different product groups including online mortgages, bank mortgages, and mortgages from insurance companies.
More on this topic:
Swiss Mortgage Index graph
Overview of Swiss mortgage interest rates (table)
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