SNB interest rate cut Mortgages cheaper in the second quarter
After the Swiss National Bank (SNB) cut its key interest rate again in June, interest rates for mortgages have also fallen further. In anticipation of further interest rate cuts, homeowners are also increasingly opting for mortgages with shorter terms.
04.07.2024, 05:00
04.07.2024, 12:39
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- When the Swiss National Bank lowered the key interest rate to 1.25 percent from 1.50 percent in June, the interest rates for fixed-rate and Saron mortgages also fell immediately, according to a new mortgage barometer.
- The gap between Saron and fixed-rate mortgages has narrowed slightly.
- On average, the benchmark rate for ten-year fixed-rate mortgages fell by 0.08 percentage points to 2.18 percent at the end of June.
- The average interest rate for five-year fixed-rate mortgages fell slightly less significantly to 2.09% from 2.13%.
When the SNB lowered the key interest rate to 1.25 percent from 1.50 percent in June, the interest rates for fixed-rate and Saron mortgages also fell immediately, as the comparison portal Comparis writes in its quarterly mortgage barometer published on Thursday. The gap between Saron and fixed-rate mortgages has narrowed slightly.
However, Saron mortgages are still slightly more expensive. "However, it will take at least one more interest rate cut by the SNB for Saron mortgages to become significantly cheaper than fixed-rate mortgages," Comparis financial expert Dirk Renkert is quoted as saying in the press release.
On average, the benchmark rate for ten-year fixed-rate mortgages fell by 0.08 percentage points to 2.18 percent at the end of June compared to the previous quarter. The average interest rate for five-year fixed-rate mortgages fell somewhat less significantly to 2.09 percent from 2.13 percent.
The target rates calculated by Comparis are published but still negotiable average interest rates from around 30 mortgage institutions.
Shorter terms on the rise
At the same time, mortgages with shorter terms have become more popular. For example, Comparis mortgage partner HypoPlus more than doubled the number of contracts with a term of less than three years in the second quarter. One in five mortgages had such a short term. In the first quarter, it was just under one in ten.
At the same time, the proportion of fixed-rate mortgages with a term of four to six years fell to 30 percent from 40 percent. Ten-year fixed-rate mortgages also fell from almost 50 percent to 40 percent. In contrast, demand for seven- to nine-year fixed-rate mortgages was somewhat stronger, with their share rising from 4 percent to 12 percent.
"The second interest rate cut in a row raises hopes of further rapid interest rate cuts. Mortgage borrowers are therefore adopting a wait-and-see approach and do not want to commit to too long a term," said Renkert, assessing the trend.