New UBS research shows: Here’s why Switzerland is the mortgage world champion

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No other country has home mortgage debt as high as Switzerland. UBS concludes this. A recent study by the International Monetary Fund confirms that the Swiss mortgage market is extremely resilient. What this means is that, as part of a simulation, Swiss mortgages were concluded to have the lowest probability of loan default among the 30 European mortgage markets analysed. This is a good sign.

The reason: Thanks to manageable inflation pressure, the increase in interest rates in Switzerland has been less severe than in other countries. In its analysis, UBS writes that the price development for houses has remained stable so far. Reassuring for homeowners: Comparison of the mortgage market structure in Switzerland with European countries shows that the local mortgage market is also well prepared for higher interest rates.

High hypo-debt alone is not critical

In practice, two regulatory instruments in particular are used across countries: the maximum loan-to-value amount and various forms of loan-to-value ratio.
Affordable price calculation. The first is defined as the maximum mortgage amount relative to the value of the property or the minimum requirement of equity to be contributed.

High mortgage debt alone is not critical. The amount of mortgage debt varies greatly from country to country. In Switzerland this is extremely high relative to GDP in an international context. And this despite the fact that only one in three households in Switzerland owns an apartment partially financed by a mortgage. In terms of debt ratio, the Netherlands, Denmark and Sweden follow.

Not very strict depreciation application

Switzerland is the only country examined in the UBS analysis where the loan-to-value ratio should be reduced to just two-thirds through amortisation. Therefore, the reasons for high mortgage debt in Switzerland lie in a combination of tax considerations such as imputed rental value. And less strict depreciation treatment. First of all, this is also a consequence of the high price level, writes UBS. Accordingly, high mortgage debts are also offset by significant assets. (pbe)

Source :Blick