So far, the coronavirus crisis has been something of a roller coaster ride, and this pattern is visible across fixed rate mortgages too.
Mortgages during the coronavirus crisis in retrospect
In March 2020 – when the coronavirus crisis began – Swiss mortgage interest rates fell to where they nearly reached the historical low levels of August 2019. The average interest rate for a 5-year fixed-rate mortgage (FRM) was 0.94% per annum, and the average interest rate for a 10-year FRM was 1.02% per annum.
After that, mortgage rates climbed again sharply for a time, eventually taking a downturn again in November 2020. Until the end of January 2021, interest rates stagnated at the November level – which was slightly higher than the level seen at the start of the coronavirus crisis.
Swiss mortgages in June 2021
From February until the beginning of March, 2021, interest rates climbed drastically. This year’s peak was reached on March 1, 2021: Average interest rates were 1% for 5-year FRMs and 1.28% for 10-year FRMs.
Since March 2021, we have observed a leveling out of mortgage interest rates. Interest rates have stagnated, with only small upward and downward fluctuations.
On June 8, 2021, the moneyland.ch Swiss mortgage index shows average interest rates of 0.96% per annum for 5-year FRMs and 1.23% per annum for 10-year FRMs. The interest rates of 10-year FRMs have climbed by around 12% since January 1, 2021.
“Those are significantly higher values than those we saw at the start of the year. But from a historical perspective, FRMs are still very cheap,” observes moneyland.ch CEO Benjamin Manz.
Where will mortgage interest rates go from here?
Many market observers assume that we are nearing the end of global coronavirus prevention measures. “The economic situation, on the other hand, has not yet stabilized. The future development of mortgage rates also remains unpredictable,” says Manz.
The current tendency among market observers is to assume that mortgage interest environment will remain more or less unchanged. “But a rise in mortgage rates has become more likely – largely because of the expected loosening of measures and the possibility of inflation,” believes moneyland.ch analyst Felix Oeschger.
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