Mortgage rates in Switzerland have been declining, and this trend is expected to continue. The average interest rates for ten-year fixed-rate mortgages have dropped from 1.81% at the end of September to 1.55% as of December 6.
This decrease reflects a broader trend of decreasing financing costs in the country. The decline in mortgage rates is linked to falling bank refinancing costs, as indicated by the decrease in the ten-year swap rate and the yield on ten-year government bonds. These lower rates are beneficial for borrowers, as they can lead to reduced monthly payments and overall financing costs.
The drop in reference rates for fixed-rate mortgages suggests that there may be further interest rate cuts in the future. The Swiss National Bank (SNB) has already implemented three interest rate reductions since March, and analysts predict that there may be at least two more cuts factored into the current mortgage rates. This proactive approach by the SNB aims to stimulate economic activity.
Looking ahead, experts forecast that reference rates for medium- and long-term fixed-rate mortgages will remain stable through June next year. By June 2025, the projected range for these rates is expected to be between 1.45% and 1.65%. Five-year mortgages are anticipated to fall within a range of 1.30% to 1.45%. This stability in rates provides clarity for borrowers and lenders regarding future financing costs.
The decline in mortgage rates is also expected to impact the rental market, with the reference rate for apartment rentals likely to decrease in the coming year. Despite previous rent increases resulting from hikes in the reference rate, minimal inflation effects are anticipated if tenants pursue claims following a reduction in the reference rate. However, supply shortages in the rental market may continue to drive up rents, particularly for new tenants. This interplay between mortgage rates and rental prices will be crucial to monitor as the Swiss economy undergoes these changes.
In summary, the current trends in mortgage rates and inflation in Switzerland have significant implications for borrowers, renters, and the overall financial system. The ongoing interest rate cuts by the Swiss National Bank, along with the stability in reference rates, will shape the economic outlook for the country.