The days of cheap mortgages are finally over: The average interest rate for a five-year fixed-rate mortgage is now 2.95 percent. And that’s even 3.29 percent for a ten-year mortgage. It hasn’t been this high in over ten years.
Last December, the ten-year bond was still available at an interest rate of 1.26%. The increase is quite difficult: ten years ago everyone who took a mortgage for half a million francs for ten years paid 6,300 francs a year in interest. With a current degree, 16,450 CHF will be paid annually. A difference of over 10,000 francs!
Anyone who buys an apartment or house today will have to pay another 100,000 francs in ten years for a 500,000 franc mortgage. Enough money for two luxury cars or extensive renovations.
more than 1% difference
A nice amount of money can be saved by comparing different providers. For example, Zuger Kantonalbank charges 3.66 percent interest for a 10-year period. At Generali, the same period only costs 2.55 percent. With a mortgage of 500,000 francs, this makes a difference of at least 5,550 francs per year.
High home prices and rising mortgages are having an increasing impact on the real estate market. After potential buyers bid more and more over the last two and a half years, demand is falling again and is now at pre-Corona level.
Will mortgage rates continue to rise?
Looking at the interest rate forecasts, owners and potential buyers can’t breathe a sigh of relief. “When it comes to fixed-rate mortgages, development primarily depends on interest rate expectations. If the market expects higher interest rates in the future, fixed-rate mortgage conditions will also rise again,” says Stefan Bestler, 33, VZ Vermögenszentrum mortgage advisor.
Market participants currently expect the Swiss National Bank (SNB) to raise the key interest rate between 1.25% and 1.5%. As soon as they expect more rate hikes, mortgage rates will continue to rise. “How high these will be depends on the further development of inflation and the extent of the approaching recession in Europe,” says Bestler.