Movement in the mortgage rate market
A third of homeowners want to change models
Mortgage interest rates rose last year for the first time in a long time. This unsettles many homeowners, around a third are considering changing their financing model. That says a Comparis study.
The Comparis mortgage barometer shows a slight increase in mortgage interest rates in the fourth quarter of 2022.
These are trying times for homeowners. At the beginning of 2022, mortgage interest rates rose noticeably for the first time in years: from around one percent to up to 3.5 percent in October for a ten-year fixed-rate mortgage. The turnaround in interest rates due to high inflation is the driver behind the rising interest rates in the mortgage market.
The rapid rise in mortgage rates has many homeowners looking over their home finance books in the fourth quarter. That says a new study by the comparison service Comparis.
Slight increase in the fourth quarter
The last quarter of last year was characterized by rising mortgage rates in the market for fixed-rate mortgages. The reference rates for five-year fixed-rate mortgages rose by 0.26 percentage points to 2.79 percent from the beginning of October to the end of December, and those for ten-year mortgages by 0.08 points to 3.02 percent.
With the interest rate decision by the SNB on December 15, 2022, the Saron rate rose by 0.5 percentage points to 1 percent. “Including the Saron reference margin of 0.96 percent, this results in an annualized interest burden of almost 2.0 percent for Saron mortgages,” writes Comparis in a statement. Unlike fixed-rate mortgages, Saron mortgages are tied to the current market interest rate.
A third dissatisfied with their own mortgage
In its study, Comparis found that 62.6 percent of all homes are financed exclusively by a fixed-rate mortgage. Another 15 percent have a mixed form of fixed-rate and Saron mortgage. Only 11 percent fully rely on the Saron mortgage. Another 9 percent have already paid off their house in full.
The great turbulence on the mortgage interest market in the past year has unsettled many people. According to the survey, almost a third are dissatisfied with the current mortgage and are considering changing the model. 13.5 percent of those surveyed want to switch to a fixed-rate mortgage or at least increase the proportion of the total amount that the fixed-rate mortgage accounts for. Another 17.5 percent are thinking about switching to a Saron mortgage or increasing the Saron mortgage share.
Fear of even higher interest rates
The fluctuations on the interest rate market and general economic uncertainties mean that people in Switzerland are increasingly afraid of further increases. 26.3 percent of respondents say they want to reduce their mortgage debt. Conversely, only 6.3 percent of homeowners want to increase their mortgage even further.
The Comparis study surveyed a total of 1047 people and compared the prices of 50 banks. The prices are guideline rates, which apply as a basis for negotiation. In reality, interest rates are usually lower – depending on how well you negotiate.
On average, however, you don’t pay 3.02 percent interest for a ten-year fixed-rate mortgage, but only 2.4 percent. The same applies to other maturities and Saron mortgages.