Will Saronic mortgages soon become more expensive than flat rate mortgages?

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Home buyers often face a difficult decision: Saron or flat rate mortgage? Fixed-rate mortgages usually last several years, while Saronic mortgages have shorter terms. Sarons have generally been cheaper in recent years, as key interest rates at national banks have even shifted to the red.

With the increase in interest rates announced by the Swiss National Bank (SNB) a few days ago, the gap between Saron and fixed rate mortgage will narrow again. According to the “Comparis Mortgage Barometer”, Saron housing loan interest rates increased by 0.27 points from the end of December to the end of March to 2.17 percent.

At the same time, ten-year fixed-rate mortgage rates fell 0.12 percentage points to 2.91 percent during the same period. This means that the difference between Saronic mortgages and ten-year flat rate mortgages is currently only 0.74 percent.

Market expects inflation to drop

Comparis finance expert Dirk Renkert justifies this with the market’s anticipation of falling inflation: “Many assume that interest rates have already peaked and may even fall again soon. Because oil and gas prices are currently decreasing compared to the previous year. »

Recently, however, the inflation rate has risen again to 3.4 percent. To strengthen the Swiss franc, the SNB therefore became active by selling foreign currency. “There is a risk that inflation will be underestimated due to new influencing factors such as significantly rising electricity prices and rising rents, and the SNB will be driven to raise the prime rate more than many expected,” the Comparis expert warns. “As a result, the gap between Saron mortgages and fixed-rate mortgages threatens to narrow significantly again.”

Home buyers believe interest rates will fall

It is even possible that Saron mortgages are more expensive than fixed-rate mortgages. “When buying Saron mortgages, mortgage borrowers should be aware of the risks of rising interest rates,” warns Renkert. Saron mortgages are only suitable for those who can take the risk and believe in falling interest rates. If you’re looking for planning security, you’d probably be better served with a longer-term flat-rate mortgage.

In the first three months of the year, one-quarter of the mortgage holders preferred Saron mortgages and one-fifth preferred short-term 5-year fixed-rate mortgages in transactions mediated by Comparis partner HypoPlus. Almost half of mortgage holders believe that interest rates will not increase or even decrease in the next few years. About one-third of mortgage borrowers took out a 10-year fixed rate mortgage, and one in ten took out a 12-year fixed rate mortgage.

Source :Blick