Prices for fixed-rate mortgages have been rising for some time. At the same time, interest rates for all maturities between 2 and 10 years are similarly high, at almost 3.00 %. 10-year fixed-rate mortgages have now even become slightly cheaper than 2-year ones.
Interest rates for Swiss fixed-rate mortgages are currently quoted at almost 3.00 %, according to the mortgage index of moneyland.ch. Since the beginning of the year, interest rates for fixed-rate mortgages have been in a volatile sideways trend according to the mortgage index, fluctuating between 2.40 % and 3.20 %. Fixed-rate mortgages with a term of 2 years are currently quoted at an average of 2.94 %, 5-year mortgages at 2.85 % and 10-year mortgages at 2.87 %.
The Swiss National Bank (SNB) recently raised the key interest rate again by 0.25 percentage points to 1.75 %. This is the fifth consecutive interest rate move since the SNB began tightening the monetary reins in June 2022. «However, the interest rate step was expected by the market and led to virtually no changes in the benchmark interest rates of Swiss fixed-rate mortgages», says Benjamin Manz, managing director of moneyland.ch.
10-year fixed-rate mortgages are cheaper than 2-year ones
As the current average interest rates for fixed-rate mortgages show, mortgage lenders are no longer charging premiums for longer maturities on average. Currently, the average benchmark rate for 2-year fixed-rate mortgages, at 2.94 %, is slightly higher than that for 10-year fixed-rate mortgages, at 2.87 %. «This is an exceptional situation and indicates that the market expects interest rates to fall again in the coming years», explains Felix Oeschger, analyst at moneyland.ch.
By comparison, 2-year fixed-rate mortgages were still more than one percentage point cheaper than 10-year mortgages in mid-May 2022. For many mortgage borrowers, long-term mortgages thus appear even more attractive than short-term and saron mortgages.
Further interest rate steps likely to follow
According to recent statements by SNB President Thomas Jordan, the latest interest rate step will probably not yet be enough to ensure price stability in the long term. Many experts currently expect a further interest rate step of 0.25 percentage points in September 2023. Whether there will be further interest rate steps after that depends above all on the further course of inflation.
Mortgage interest rates could rise further
Although the inflation rate declined slightly in March, April and May 2023 (in each case measured against the same month of the previous year). However, at 2.2% year-on-year in May 2023, it was still above the SNB's target range of 0.00 % to 2.00 %. «As long as inflation does not fall below 2.00 % on a sustained basis, we expect further interest rate increases», Oeschger says. And he adds, «This also has implications for mortgage rates, which could rise further this year.»
About the mortgage index from moneyland.ch
The mortgage index of moneyland.ch is based on the benchmark interest rates published online, which moneyland.ch automatically collects twice a day. For 10-year fixed-rate mortgages, the index corresponds to the daily average of the interest rates of over 30 banks and insurance companies. In addition, benchmark interest rates are indexed for fixed mortgages with further maturities, variable mortgages, construction loans and Saron mortgages.