Financial services provider Interest rates for fixed-rate mortgages fall significantly

Prices for fixed-rate mortgages have been on a downward trend since the middle of the year and are historically very favorable again. According to Moneypark, however, a slowdown in competition among providers is preventing even more attractive offers for prospective buyers.

With the expected reduction in key interest rates, Saron mortgages should become more attractive again.

Since the end of June, interest rates for fixed-rate mortgages have fallen by 0.5 percentage points, according to a study published on Monday. An average interest rate of 1.94 percent is currently due for a ten-year term. In June, 2.44 percent still had to be paid.

There are hardly any differences for shorter terms: according to Moneypark, the average interest rate for a two-year mortgage is currently 1.75 percent and 1.76 percent for a five-year mortgage. Interest rates for these terms have also fallen by half a percent.

Competition eases

According to the study, the decline in the third quarter was surprisingly strong. However, the offers could be even better. Many banks expanded their margins at the beginning of the year and insurance companies and pension funds have now also followed suit.

As a result, competition has eased: the interest rate difference between the most favorable offer and the market average is currently 45 basis points, according to the analysis. In the first half of the year, the difference was still 62 basis points.

Saron still unattractive

The interest rate for Saron mortgages has also fallen since the middle of the year. However, this has only fallen by around 0.23 percentage points in the same period and is currently well above fixed-rate mortgages at 2.13 percent, according to the report. This means that the more flexible instruments continue to play a subordinate role in new purchases and extensions.

However, Saron mortgages could soon become more popular again, according to the study. Should the Swiss National Bank (SNB) lower the key interest rate as expected, they would once again come "within striking distance" of five-year fixed-rate mortgages. This would make the decision somewhat more difficult for mortgage borrowers.

Stable fixed-rate mortgage development expected

Looking ahead, the mortgage lenders surveyed expect interest rates to continue to fall, especially for short and medium terms. The trend should then stabilize in the first quarter of 2025, they say. However, around a third see further downward potential for short terms.

The greatest uncertainty factors for interest rate trends are currently primarily the economic development of the USA and the EU as well as fears of recession. Inflation, on the other hand, has receded somewhat into the background according to the survey.

Moneypark surveyed around 50 mortgage lenders between August 27 and September 10. Banks, insurance companies and pension funds took part in the survey.