If you’re a homeowner in Switzerland, you might have noticed that the interest rates for fixed-rate mortgages have been climbing steadily this year. According to the Swiss Mortgage Index by moneyland.ch, the rates have hit their highest point so far, and there are indications that they could even surpass last year’s peak.
2022 was a financially challenging year for homeowners who needed to get a mortgage. Now, the signs are pointing towards a sustained increase in the cost of mortgage interest rates throughout 2023.
While the year started with a significant drop in interest rates for Swiss fixed-rate mortgages, the trend has reversed over the last month. As per Felix Oeschger, a mortgage specialist at moneyland.ch, the fixed-rate mortgages have gotten more expensive, and they are now close to the highs of 2022. The moneyland.ch Swiss Mortgage Index shows an average interest rate of 2.95% per annum for five-year FRMs and 3.08% per annum for 10-year FRMs.
The Bleak Outlook
The high inflation levels over the past year have forced central banks in western countries to take aggressive measures, driving Swiss fixed-rate mortgages to their initial peak in October 2022. As inflation rates dropped slightly, the interest rates sank too.
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However, recent weeks have seen fears that inflation has not subsided taking hold in Switzerland, Europe, and the United States. In January 2023, inflation rates, as per the Swiss Consumer Price Index, were higher than the previous month, which was the first time since August 2022. The inflation figures for February 2023, which were released yesterday, revealed a higher-than-expected inflation rate of 3.4%.
At the start of the year, most market observers believed that the Swiss National Bank (SNB) would not adjust its key interest rate above a maximum of 1.5%. But now, it seems likely that the key interest rate will surpass that limit this year. This increase will impact mortgage interest rates, as Felix Oeschger predicts that the rates in 2023 will surpass the highest points seen in 2022.
As the interest rates for Swiss fixed-rate mortgages reach new highs this year, homeowners will need to carefully consider their financial options. With a bleak outlook for the rest of the year, it\\\’s important to keep an eye on inflation rates and how they impact mortgage interest rates. While the situation may seem challenging, being informed and proactive can help you make the right decisions and navigate this period successfully.