Banking News

Mortgage Rates in Hibernation

December 17, 2019 - Benjamin Manz

The mortgage index published by independent online comparison service has trended sideways for around one month. Market participants expect mortgage interest rates to remain low.

Mortgage interest rates declined sharply over the first half of 2019, hitting a historical low in August. Interest rates rose slightly between September and mid-November of 2019. Since mid-November, interest rates have not shown any significant changes.

The mortgage index shows that on December 16, 2019, the average interest rate for a 5-year fixed rate mortgage (FRM) is 0.96% per annum, while the average interest rate for a 10-year FRM is 1.10% per annum.

 “Shortly ahead of Christmas, Swiss mortgage interest rates went into hibernation,” says Benjamin Manz, CEO of, Switzerland’s leading online comparison service in terms of precision. Although mortgage interest rates are slightly higher than they were in August, they remain constantly low.

Differences between the cheapest and most expensive mortgage lenders are constant

The spread between the interest rates offered by the most and least affordable mortgage lenders has remained almost unchanged since the start of 2019. This spread is 0.64 percentage points for 5-year FRMs and 0.57 percentage points for 10-year FRMs. As a result, the effective savings potential in the Swiss mortgage market has not changed since the beginning of the year. But the constant high spread shows that comparing interest rates is as important as ever.

Ongoing low interest rates

The yield curve has flattened out over the course of the year. Interest rates for LIBOR-based mortgages and 2-year FRMs have sunk by just 0.01 and 0.05 percentage points respectively since the beginning of 2019. On the other hand, the average interest rate for 10-year FRMs has fallen by a notable 0.37 percentage points over the same period.

The current situation is what is known as a flat yield curve: a scenario in which the interest rates of long-term mortgages are similar or identical to those of short-term mortgages. “The flattening of the yield curve indicates that the majority of market participants expect interest rates to remain low or to decline further,” states analyst Felix Oeschger. This means that mortgages should remain very affordable for the time being.

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Expert Benjamin Manz
Benjamin Manz is CEO of and an independent expert on banking and finance.
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