SNB stands still, banks turn up the heat Zero interest rate remains - but home ownership is becoming more expensive for many
The Swiss National Bank (SNB) is sticking to the zero interest rate. However, this is not good news for many homeowners: mortgage rates are continuing to rise.
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- The SNB is leaving the key interest rate at 0%, as inflation has fallen to 0% and the strong franc is having a dampening effect on prices.
- Despite the stable key interest rate, mortgage rates are rising due to higher capital market interest rates and refinancing costs.
- More and more customers are choosing 8- or 9-year mortgages as an alternative to the more expensive 10-year term.
In December, the SNB decided to leave the key interest rate at 0 percent. This had been expected. The reason for this is the very low inflation: in November, it was also 0 percent year-on-year. The strong franc also ensures that imported goods remain cheap and prices are hardly rising overall.
"Maintaining the zero interest rate comes as no surprise and was expected by market participants", comments Dirk Renkert, financial expert at Comparis. Interest rate cuts are therefore currently rather unlikely. In addition, a recently published declaration between Switzerland and the USA gives the SNB more leeway on the foreign exchange market.
Europe waits - USA cuts further
The European Central Bank (ECB) is also keeping its key interest rate stable at 2%. At 2.1%, inflation in the eurozone is close to the target value. At the same time, the first voices are warning of possible interest rate hikes if inflation picks up again.
In the USA, the trend is moving in the opposite direction: the US Federal Reserve has lowered its key interest rate for the third time in a row - to between 3.5% and 3.75%. The reason for this is a weaker labor market. Inflation fell to 2.7 percent in November, although not all data could be collected due to a government shutdown. Comparis expert Renkert also warns of political influence on the Fed's independence.
Mortgage interest rates are rising - despite zero interest rates
Although the key interest rate in Switzerland remains unchanged, mortgage rates are rising significantly. At the end of December, a 10-year fixed-rate mortgage cost an average of 1.91% - 0.23 percentage points more than at the end of September. Even 5-year fixed-rate mortgages have become more expensive, most recently at 1.61 percent.
The main reason for this is not the SNB, but the financial markets. The yield on 10-year Confederation bonds rose from 0.20 to 0.33 percent. So-called swap rates, which are important for banks, have also risen significantly. The banks pass these higher costs on to their customers.
The increase is particularly noticeable for Saron mortgages. Their interest rate depends heavily on the banks' margins. "Even if these margins are not public, you can clearly see that they have risen," says Renkert. At the end of December, Saron mortgages were between 0.8 and 1.2 percent. Ten-year fixed-rate mortgages cost between 1.5 and 1.9 percent, depending on the provider - significantly more than in the fall.
New favorites: 8- and 9-year terms
Many customers are responding to this with new strategies. Instead of traditional 10-year mortgages, more and more are opting for 8- or 9-year terms. Their share rose from 4 to 14 percent within a year. Although the 10-year fixed-rate mortgage remains the most common choice, its share has fallen sharply - from almost 80 percent to around 40 percent.
Savings potential in negotiations remains high
The reason: "People who have a personal pain threshold for interest rates are looking for cheaper alternatives with a similar term," explains Renkert.
Despite rising interest rates, there is still potential for savings. A comparison by Comparis shows that it is sometimes possible to negotiate interest rates that offer potential savings of several tens of thousands of francs.
