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Interest rates for real estate financing are back near their all-time lows. While certain providers are already close to pain threshold, there is still a margin down for others.
Mortgages have gotten even cheaper.
For home buyers, an environment currently exists with different omens. On the one hand, high house prices and demanding requirements from the mortgage lender pose great obstacles for many households, and on the other hand, extremely favorable financing conditions are a strong argument for buying a home. And even if the market has tended to move sideways as low as possible for nearly a year, mortgage holders can save or give away a lot of money with their decisions.
The largest movements have occurred with long execution times.
In general, home buyers benefit from the fact that mortgage rates have been falling for about six months. Due to the sudden increase in the turbulent weeks in financial markets caused by the Crown, the average target rate for ten-year fixed-rate mortgages rose to 1.19% in March, according to the comparative portal Comparis. At the end of June this value was again at 1.11% and at the end of September at 1.05%. Therefore, the difference from the previous low of 0.99% has been significantly reduced.
Fixed-rate mortgages with shorter terms have also become cheaper, although the decline is somewhat less pronounced there. For five-year periods, the average benchmark is currently 0.91% (three months ago: 0.95%) and for two-year periods, 0.86% (0.89%).
Mortgage platforms are advertised with “optimal conditions”
It is assumed that interest rates will remain extremely low for a long time due to the general monetary policy climate. With several lenders offering ten-year mortgages for around 1.3%, for example, there is still room for improvement.
This is less the case for cheaper providers. On mortgage platforms such as Hypoplus, Hypotheke.ch, Key4 from UBS, Moneypark or Valuu, “maximum conditions” can be requested for different terms. These interest rates can be concluded if certain requirements are met, for example with regard to the loan amount or the creditworthiness of the customer.
At least for banks, the pain threshold has been reached.
There are also certain differences in these “maximum conditions”, since the platforms work with a greater number of mortgage lenders, but not always with the same ones. These “optimal conditions” are currently particularly favorable for most terms on Hypotheke.ch. As a prerequisite for the award under these conditions, the portal names a maximum affordability of 20%, a loan of a maximum of 60%, a property value of at least CHF 1.35 million and free assets of CHF 200,000.
It is highly unlikely that there will be a significant drop in interest rates with these offers. Since banks often use interest-free savings to refinance their mortgages, they have little leeway if they still want to earn something. Unsurprisingly, banks are rarely among the cheapest providers, and when they do, they tend to have shorter terms.
Best viewed by alternative providers like pension funds, insurers, or investment foundations. For them, loans represent a form of investment, if the alternative to a mortgage is to invest money at an interest rate of -0.75%, the pain threshold is far from being reached.
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