The published guide rates of Swiss fixed-rate mortgages (FRMs) have made an unusually steep climb since mid-December, 2021. On December 14, 2021, the Swiss mortgage index by moneyland.ch showed average annual interest rates of 0.97 percent for 5-year FRMs and 1.17 percent for 10-year FRMs.
Current mortgage interest rates
On February 7, 2022, average interest rates sat at 1.28 percent for 5-year mortgages and 1.55 percent for 10-year mortgages. Comparing those rates to mid-December, 2021, we see that rates have gone up by 0.31 (5-year FRMs) and 0.38 percentage points (10-year FRMs).
Notable differences between service providers
After this most recent rate hike too, there are still major differences in the individual interest rates offered by Swiss lenders. The difference between the most affordable and the most expensive published guide rates for 10-year FRMs is currently 0.69 percentage points. The most favorable offer is 1.14 percent per annum, and the least favorable is 1.83 percent per annum. Online mortgages continue to be disproportionately affordable. While the average interest rate for 10-year FRMs across all of the analyzed guide rates is 1.55 percent, the average rate for online mortgages is a much lower 1.33 percent.
Outlook
While the Federal Reserve, the US central bank, was able to raise its interest rate more than once this year, neither the European Central Bank (ECB) nor the Swiss National Bank (SNB) have announced upcoming rate increases. The SNB in particular has not been under substantial pressure because inflation remains relatively low in Switzerland. That indicates that the potential for further increases in the cost of Swiss mortgages is limited.
But for the moment, interest rates are on an upward trajectory. “In a scenario where inflation continues to climb, the ECB and SNB may be forced to respond with interest changes earlier than they would otherwise,” observes moneyland.ch analyst Felix Oeschger. That is already happening in the United States. Inflation is pushing the US Federal Reserve, which sets the pulse of international money markets, to take action.
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