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Another rate hike followed by an interest rate pause: whatever the Swiss National Bank (SNB) decides next Thursday will have ramifications for housing finance. “Saron mortgages are likely to become more expensive again,” warns Dirk Renkert (58) of the Comparis comparison service. The financial expert expects another rate hike from the SNB. “The gap between five- and ten-year fixed-rate mortgages should therefore again be significantly reduced,” says Renkert.
This is true even if the SNB raises the key interest rate by only 0.25 percent, as most economists would expect. But it could even be 50 basis points. But then things might calm down for a while on the interest front.
“Substantial fluctuations”
As a reminder: The benchmark interest rate for ten-year fixed-rate mortgages is 2.96 percent (as of June 15, 2023). That’s only slightly less than the start of the year with 3 in front of the decimal point. “But there were significant fluctuations in the first half of the year,” says Renkert. Unlike a rising Saron, the Comparis expert expects “a sideways movement in medium and long-term mortgage rates” and more volatility, note.
Saron home loans are up 0.94 percent since the start of the year, currently at 1.44 percent. Renkert notes: Because bank-reported margins for saron mortgages are typically between 0.80 and 1 percent, the non-negotiable cost of saron mortgages ranged from 2.24 to 2.44 percent. Hence the assumption that the deficit for fixed rate mortgages will continue to narrow. Comparis assumes an expected interest rate range of 2.70 to 3.10 percent by the end of December 2023 for ten-year fixed mortgages.
Therefore, the SNB’s final interest rate decision on June 22 will likely have direct ramifications primarily for Saron mortgage holders, as the Saron rate follows interest rate action at a 1:1 ratio.
Can you still afford to own your own home?
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
