For home owners who had to get a mortgage in 2022, last year was a financially trying time. Now, many signs point towards a steady increase in the cost of mortgage interest across the rest of 2023.
The year 2023 started out with a substantial drop in interest rates for Swiss fixed-rate mortgages (FRMs). “But for a month now, fixed-rate mortgages have gotten more expensive again, to where they are no longer very far from the highs of 2022,” concludes moneyland.ch mortgage specialist Felix Oeschger.
At 2.95 percent interest per annum for five-year FRMs, and 3.08 percent interest per annum for 10-year FRMs, the moneyland.ch Swiss Mortgage Index is now showing the highest levels seen this year.
The outlook is getting bleaker
The unusually high inflation over the past year forced western central banks to take aggressive measures, eventually driving Swiss fixed-rate mortgages to an initial high in October, 2022. Interest rates sank somewhat over the following weeks as inflation rates lowered slightly.
But in recent weeks, fears that inflation has not subsided have taken hold in Switzerland, and in Europe and the United States. January 2023 was the first month since August 2022 in which inflation, as per the Swiss Consumer Price Index, was higher than the preceding month. The inflation figures for February 2023, released yesterday, revealed an inflation rate which was higher than expected, at 3.4 percent.
In January, the majority of market observers still believed that the Swiss National Bank (SNB) would not adjust its key interest rate above than a maximum of 1.5 percent. But now it seems likely that the key interest rate will already surpass that limit this year. That takes a toll on mortgage interest rates. “I expect mortgage interest rates in 2023 to surpass the highest points we saw in 2022,” says Felix Oeschger.
The moneyland.ch Swiss Mortgage Index
The Swiss Mortgage Index from moneyland.ch is based on the published guide rates which moneyland.ch automatically collects twice per day. The indexed rate for 10-year fixed-rate mortgages shows the average of the interest rates from more than 30 Swiss banks and insurance companies. The index also tracks the interest rates of: fixed-rate mortgages with other mortgage terms; adjustable-rate mortgages; construction loans; and SARON mortgages. In addition to tracking guide mortgage interest rates per lender and mortgage, moneyland.ch also records additional data like median rates, arithmetic average rates, and minimum and maximum rates for online mortgages, mortgages from banks, and mortgages from insurance companies.
More on this topic:
Compare current Swiss mortgage interest rates now
Graph showing Swiss mortgage interest rate developments (PDF)
Detailed Swiss Mortgage Index tables (PDF)
