Gone are the days of extremely low mortgage interest rates. In many parts of Switzerland it is again more expensive to buy than to rent. Will the yield curve continue to point upward in 2023?
There’s a lot to be said for that. Especially since national banks are expected to raise interest rates further in 2023. However, the curve will not point up as steeply as it has in the last 12 months.
SNB interest rate rises again
“In 2023, most central banks, including the Swiss National Bank, are likely to reach their target levels for key interest rates and then pause for the time being,” says Fredy Hasenmaile, 55, real estate specialist at Credit Suisse.
“We expect the SNB prime rate to rise to 1.5 percent by March 2023,” says Ursina Kubli, 43, senior real estate specialist at Zürcher Kantonalbank. This is currently 1%.
Interest rate hike for mortgage
Both CS and ZKB expect only a slight increase in long-term mortgages in 2023, as markets are already predicting some rate hikes.
However, Saron mortgages will keep pace with the Central Bank’s rate hikes. “Saron mortgages will experience the biggest increase at the short end of the yield curve,” Hasenmaile says.
CS estimates it has a high probability of going up to 2 or 2.5 percent. This reduces the previously high savings potential of the Saron mortgage compared to a flat rate mortgage. A 10-year flat-rate mortgage will likely be around 2.8 percent a year from now on.
Saron is getting more expensive
One thing is clear: In the future, landlords will no longer be able to set aside money as before. “Depending on spending behavior, this could lead to adjustments to other key budget items,” Hasenmaile says.
Home buyers should therefore be prepared for higher housing costs. But there’s also good news: the queue of potential buyers will be shorter in the future than when interest rates are negative. Experts predict that the marketing time will again be extended.
Buyers can take the time
If you are looking for a home of your own, you can take more time to carefully examine the property and its surroundings. “Previously, there was almost no time for this because of the enormous time pressure,” Kubli says.
Real estate experts do not expect a decrease in housing prices. Demand is expected to remain the same as homeowners continue to get a good selling price. Conversely, if you want to buy, you continue to pay a high price.
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