Financial service provider Swiss mortgage market growing more slowly

The Swiss mortgage market grew significantly more slowly in 2023 than in previous years. Mortgage brokers in particular felt the effects of this.

Specifically, according to an analysis by Helvetia subsidiary Moneypark, the mortgage market volume rose by CHF 29 billion to a total of CHF 1,239 billion last year. This corresponds to an increase of 2.4 percent. This growth is well below the average of 3.1 percent over the last 10 years and is the lowest in a decade.

The reason for the weaker growth is the rise in interest rates in recent years, which will continue until the beginning of 2024, according to a study published by the Helvetia subsidiary on Wednesday. This is now "making itself felt with a delay", Moneypark CEO Lukas Vogt told the news agency AWP.

This is particularly noticeable in the buyer business: "The higher interest rates in the meantime and the fact that prices are not falling at the same time meant that many potential buyers had to abandon their plans or at least postpone them," Vogt explains. However, the growth of 29 billion is still "impressive", especially in an international comparison.

Cantonal banks benefit from Credit Suisse collapse

Meanwhile, the cantonal banks secured the largest share of growth. With an increase in volume of almost 20 billion or 4.5 percent, they did not leave much to the other market participants. According to Vogt, the cantonal banks have an extremely stable market presence. Added to this is the collapse of Credit Suisse, from which the cantonal banks are likely to have secured the largest slice of the cake.

However, pension funds were also once again among the "growth champions". They grew by 6.3 percent in 2023, compared to 5.5 percent in the previous year. In terms of total mortgage volume, however, they are still a niche player with a market share of 2%.

Intermediaries confident

Moneypark expects "growth on a similar scale" for the market as a whole in 2024. The key interest rate cuts that have already taken place and any further reductions by the SNB should also give the trend a boost.

This would also help brokers such as Moneypark. After all, the weak development was not without consequences for the business. The brokerage market experienced a decline in volume for the first time since its inception in 2012. This amounted to around 7 percent to a total of CHF 12.2 billion. In the previous year, growth had still amounted to 19 percent.

"Mortgage brokers in Switzerland are traditionally particularly strong in the first-time buyer business," says Vogt. This accounts for between 60 and 80 percent of the business. Last year, however, the first-time buyer business collapsed "substantially".

However, the confidence of property owners and prospective buyers should soon return. "The general economic situation, stable inflation and good interest rate prospects have taken a lot of uncertainty out of the market," says the Moneypark CEO.