Bad news for home buyers: The moneyland.ch Swiss mortgage index has climbed drastically over the past year. Currently, the average advertised interest rate is 2.54 percent per annum for five-year fixed-rate mortgages (FRMs) and 2.76 percent per annum for ten-year FRMs. “On average, the cost of a ten-year fixed-rate mortgage is around double what it was at the start of 2022,” says moneyland.ch CEO Benjamin Manz. Current advertised rates for five-year FRMs are 2.5 times higher than they were in early 2022.
That means mortgages remain very expensive. But rates still remain lower than the peak rates we saw in October, 2022, when the Swiss mortgage index recorded 2.96 percent average annual interest for five-year FRMs, and 3.35 percent for ten-year FRMs.
Other interest rate hikes
To counter inflation, the Swiss National Bank (SNB) drastically raised its key interest rate last year, triggering a general hike in mortgage interest rates. Most market participants expect the SNB to further raise its key interest rate by an additional 0.25 to 0.5 percentage points on top of the current 1 percent after its upcoming meeting in March, 2023. It is expected that the key interest rate will reach 1.5 percent by the SNB’s meeting in June, 2023, at the latest.
These upward moves in the key interest rate do not necessarily have to drive mortgage interest rates further up, because the anticipated 1.5-percent key interest rate by the middle of the year should already be priced into the interest rates of FRMs. The big question is whether the expected key rate will be enough to bring inflation under control.
Inflation in Switzerland has stabilized somewhat, but the 2.8 percent inflation recorded in December is still notably higher than the SNB’s targeted limited of 2 percent. As long as that remains the case, we can expect to see further tightening of monetary policies. “In 2023, I expect to see mortgage interest rates remain high, and to continue climbing,” says moneyland.ch analyst Felix Oeschger.
The moneyland.ch Swiss mortgage index
The mortgage index from moneyland.ch is based on the advertised mortgage interest rates which lenders publish online. These are automatically recorded by moneyland.ch twice daily. For ten-year fixed-rate mortgages, the index shows the daily average of the mortgage interest rates advertised by more than 30 banks and insurance companies. Additionally, the advertised mortgage interest rates of fixed-rate mortgages with longer terms, adjustable-rate mortgages, construction loans, and SARON mortgages are also indexed. In addition to the advertised interest rates per lender and mortgage, the index also records other indicators like the median, arithmetic average, mode, minimum and maximum rates for different product groups like online mortgages, mortgage offers from banks, and mortgage offers from insurance companies.
More on this topic:
Graphic: Mortgage index developments (German PDF)
Detailed tables (German PDF)
Compare Swiss mortgages with the interactive comparison
See all moneyland.ch mortgage calculators
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