Worth switching now?: Sarong mortgages are now generally more expensive than fixed-rate mortgages

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It has been clear to property buyers for years that if you can sleep well despite fluctuations in short-term interest rates, you will get a Saron mortgage and save a lot of money. But as the current mortgage index from the Swiss online comparison service Moneyland shows, this is no longer true.

The interest rate on Sarong mortgages is currently 2.61 percent. Moneyland calculated the interest rate based on quotes from more than 20 providers. For a mortgage over one million francs, the cost at this interest rate would be 26,100 francs.

Financial institutions charge the same amount on average for a six-year fixed-rate mortgage. Saron mortgages are currently more expensive than two- and five-year fixed-rate mortgages, which have an average interest rate of 2.57 percent. Ten-year fixed-rate mortgages are currently more expensive at 2.71 percent.

Why did Saron mortgage loans suddenly become more expensive?

In the Saron mortgage, a framework contract is concluded with a fixed period, usually between one and five years. The interest rate can fluctuate significantly during this period and is determined by ongoing mortgage transactions.

The fact that Saron mortgages are now mostly more expensive is due to the Swiss National Bank’s recent decision a month ago to not raise the interest rate further. Since then, average benchmark interest rates on fixed-rate mortgages have fallen slightly, while interest rates on Saron mortgages have remained stable.

Now is a fixed rate mortgage worth it?

Should households with sarong mortgages therefore react as quickly as possible? Whether a fixed-rate mortgage or a Saron mortgage is cheaper depends largely on the future development of interest rates, the comparison portal writes in a press release.

An example: A five-year fixed-rate mortgage costs an average of 2.57 percent today, while a five-year Sarong mortgage is slightly more expensive, currently at 2.61 percent. But if the SNB cuts key interest rates again in the next few years and does not increase them for five years, the Saron mortgage will still be cheaper over the entire period. The interest rate on a Saron mortgage adjusts periodically (usually quarterly) to match the Saron interest rate.

It should also be noted that a fee must be paid when exiting an existing Saron mortgage.

SNB has not reached its target yet

But the SNB may not have reached the end of its fight against inflation yet. A month ago, the Central Bank expected the inflation rate to be above the targeted two percent next year. According to Moneyland, a further increase in inflation cannot be ruled out at the moment.

The small interest rate difference between two-year fixed-rate mortgages and Saron mortgages suggests that significant interest rate cuts are unlikely, at least for short-term fixed-rate mortgages. Expert Felix Oeschger writes: “If the market assumed that we were facing a continuous decline in interest rates, short-term fixed-rate mortgages would not be at a similar level today, but would be significantly lower than Saron mortgages.” Land of money.

Source :Blick