Short or long term?: Which mortgage model is in demand among homeowners?

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At the end of June, the benchmark interest rates of 3-year and 10-year fixed-rate housing loans were almost the same. According to data from Compareis’ mortgage partner, Hypoplus, the average is 2.71 percent and 2.83 percent, respectively. Long-term home financing has gotten cheaper since the start of the year, while the cost of Saron and shorter-term home loans has skyrocketed.

“The strong increase was driven by the SNB’s decision to raise the main interest rate by 0.5 percentage points in March and another 0.25 percentage points in June to 1.75 percent,” Comparis finance expert Dirk Renkert (58) said in a statement. From the comparison service. Renkert noted that the development of refinancing costs contributed to a noticeable increase in the price of shorter-term fixed-rate mortgages.

Which mortgage model is preferred?

The Compparis analysis shows that nearly a quarter of mortgage holders prefer Saron mortgages in the first 6 months of the year. The other five chose the 5-year flat rate mortgage. Renkert states that nearly half of mortgage lenders are convinced that interest rates will not rise further, or even fall, over the next few years.

Conversely, one-third of mortgage borrowers have a 10-year flat-rate mortgage, and about one-tenth have a 12-year flat-rate mortgage. Uncertainty can be felt in the selection of the mortgage model. “Saron mortgages are better suited to those who can financially handle fluctuations in interest rates,” Renkert says. Others are probably better off with longer-term fixed-rate mortgages.

Source : Blick