A bit of bad news for owners, or prospective buyers, of Swiss properties: they will have to pay more than double of 2022 prices for a 10-year fixed rate mortgage, Moneyland consumer platform reported on Wednesday.
“Swiss mortgage index has climbed drastically over the past year,” Moneyland said.
Currently, the average interest rate is 2.54 percent for five-year fixed mortgages and 2.76 percent for 10-year terms. As a comparison, at the beginning of 2022, these rates were 1.01 percent and 1.26 percent, respectively.
“On average, the cost of a ten-year fixed-rate mortgage is around double of what it was at the start of 2022,” according to Moneyland’s CEO Benjamin Manz.
Five-year mortgages are 2.5 times higher than they were in early 2022, he said.
This is not exactly a surprising development, as experts had predicted the hike when Switzerland’s central bank (SNB) raised its key rate sharply last year to fight inflation, which, in turn, caused mortgage rates to go up as well.
The upward trend could continue well into 2023, as the SNB’s chief Thomas Jordan recently said that another hike is likely, further increasing the current interest rate of 1 percent.
READ MORE: Switzerland set for another interest rate hike, central bank chief warns
This means that mortgages will remain “very expensive, and could well climb further as 2023 progresses,” Moneyland said.
If you already have a fixed-rate mortgage, then you are safe from rate increases for the term of your mortgage.
However, for new home buyers, or those with variable-rate mortgages, things may be more problematic.
“It is not excluded that mortgage interest rates will reach 3 to 4 percent next year,” according to Donato Scognamiglio, director of real estate platform Iazi.
READ MORE: What’s the outlook for the Swiss property and rental market in 2023?
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