These are tough times for homeowners. At the beginning of 2022, mortgage interest rates increased noticeably for the first time in years: from about one percent to 3.5 percent in October for a ten-year fixed-rate mortgage. The return in interest rates due to high inflation is the driving force behind the rise in interest rates in the mortgage market.
The rapid increase in mortgage rates is causing many homeowners to review their home finance ledgers in the fourth quarter. That’s a new study by comparison service Comparis says.
Slight increase in the fourth quarter
The last quarter of last year was characterized by increasing mortgage rates in the fixed rate mortgage market. Five-year fixed-rate mortgage reference rates increased by 0.26 points to 2.79 percent from the beginning of October to the end of December, while ten-year mortgage reference rates increased by 0.08 points to 3.02 percent.
With the interest rate decision taken by the SNB on December 15, 2022, the Saron rate increased by 0.5 percentage points to 1 percent. “This, including the Saron reference margin of 0.96 percent, results in an annual interest burden of approximately 2.0 percent for Saron mortgages,” Comparis writes in a statement. Unlike fixed rate mortgages, Saron mortgages are tied to the current market interest rate.
Third dissatisfied with own mortgage
In his study, Comparis found that 62.6 percent of all homes are financed by a flat-rate mortgage alone. Another 15 percent hold a mixed fixed-rate mortgage and a Saronic mortgage. Only 11 percent fully rely on Saronic mortgages. Another 9 percent have already paid for their entire homes.
The great turmoil in the housing loan interest market last year made many people nervous. According to the survey, almost a third are dissatisfied with the current mortgage system and are considering changing the model. 13.5 percent of respondents want to switch to a flat rate mortgage or at least increase the percentage of the total amount generated by the flat rate mortgage. Another 17.5 percent are considering switching to Saron mortgages or increasing their Saron mortgage share.
Fear of even higher interest rates
The fluctuations in the interest rate market and general economic uncertainties are causing people in Switzerland to fear more and more interest rates. 26.3 percent of respondents say they want to reduce their mortgage debt. Conversely, only 6.3 percent of homeowners want to increase their mortgages further.
The Comparis study surveyed a total of 1047 people and compared the prices of 50 banks. Prices are guide rates that form the basis for negotiation. In reality, interest rates are often lower depending on how well you bargain.
On average, however, you only pay 2.4 percent interest on a ten-year fixed-rate mortgage, not 3.02 percent. The same is true for other maturities and Saron mortgages.