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Interest rate cuts by the Swiss National Bank (SNB) have halved the cost of servicing 10-year fixed mortgages compared to 2022 peaks, according to online comparison platform Comparis.
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In the third quarter, the average ten-year rates calculated by Comparis fell within the 1.5%-2.0% range for fixed mortgages and between 1.6% and 2.0% for Saron-based loans, according to its report published on Thursday.
This relatively low level has led to strong demand, with 72% of those surveyed who have taken out a home loan choosing a ten-year fixed-rate mortgage, compared with 40-50% in the previous two quarters. The proportion of medium-term mortgages – i.e. four to six years – halved over three months to 14%. Three-year mortgages, including Saron, were reduced to a mere 7%, compared with 20% previously.
Despite the SNB’s rate cuts, fixed-rate mortgages remain cheaper than their Saron-based counterparts, but negotiating margins have changed: “The market’s expectation of a further fall in interest rates has had a positive effect on fixed-rate mortgage conditions since June, with rates falling sharply,” notes Dirk Renkert, Comparis money specialist, quoted in the press release.
Downward trend
The downward trend in indicative ten-year mortgage rates has been uninterrupted since June. At the end of the third quarter, they stood at 1.81%, down 0.33 percentage points on the end of June. For five-year rates, Comparis reached 1.68%, down 0.36 percentage points over three months. At the beginning of January, these two indicative rates stood at 2.26% and 2.13% respectively.
The yield on ten-year Swiss government bonds stood at 0.41% at the end of September, down 0.25 percentage points since the start of the year, according to the online comparison service.
In September, the SNB cut its key interest rate by 0.25 percentage points to 1%, the third consecutive reduction of this magnitude.
The major central banks are also following the path of monetary easing, the US Federal Reserve having “struck a blow” by lowering its rate by 0.50 points and now targeting 4.75-5%, recalls the press release. The European Central Bank set its key rate at 3.5%, following a 0.25% cut.
Translated from French by DeepL/mga
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