Alarm signals from the National Bank SNB: How dangerous is the situation for Swiss property owners?

class=”sc-29f61514-0 jbwksb”>

One thing is clear for the Swiss National Bank (SNB): inflation can only be combated by raising interest rates. He repeats this mantra tirelessly and has already announced rate hikes.

This is bad news not only for tenants but also for landlords. Things could get tough for a fifth of homeowners if interest rates rise above 3 percent, according to the Financial Stability Report released Thursday.

Anyone who thinks we’re still a long way from that should keep in mind that the SNB’s key interest rate has increased by 2.5 percent in a year. Interest rates in Switzerland were negative only a year ago, but have changed rapidly since then!

However: The National Bank also assumes extreme scenarios in its report. It’s his job to advance the financial and real estate markets step by step. To see if markets can also absorb extreme shocks.

Price correction between 15 and 40 percent

The result: “Vulnerabilities in the mortgage and real estate markets persist,” writes SNB. “As mortgage rates rise, the probability of falling housing prices has increased,” he said. Many properties are very high in value, with price corrections of 15 to 40 percent – down.

However, even the SNB admits that these calculations do not include all price-determining factors. For example, the supply of living space in Switzerland is very low. And demand remains high – also due to high levels of immigration into the booming job market. Factors that cause prices to increase rather than decrease.

Experts expect prices to remain stable

Unlike Germany, for example, where property prices are currently falling. Because the interest rates are much higher than in Switzerland – and there is enough room for new residential buildings there.

Experts put everything in the open and expect a recession in Switzerland, not a sharp fall in house prices. Also, many long-term homeowners bought it at lower prices. And unless they want or have to sell, they are not directly affected by even a major price correction.

In addition, anyone at risk of defaulting on paying mortgage interest will forego vacations, a new car, or other expensive purchases before the mortgage loan can no longer serve.

Source :Blick