Mortgage rates have risen significantly since the end of August. Fear of higher inflation is driving rates higher.
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Real estate is in great demand in the pandemic: residential buildings in the “Seldwyla” estate in Zumikon, Canton of Zurich. (Symbol image)
Photo: Christian Beutler (Keystone)
The Mortgage Index published by Moneyland.ch on Wednesday for 10- and 15-year fixed-rate mortgages is at a multi-year high.
The average interest rate for fixed-rate mortgages with a term of 10 years rose from 1.11 percent at the end of August to 1.31 percent most recently, which is the highest value since March 2019. There is also a clear upward trend in 5-year fixed-rate mortgages. The interest rate climbed from 0.93 percent to 1.02 percent. According to Moneyland.ch, it is the highest value since April 2020.
The biggest increase was in 15-year fixed-rate mortgages. Here the average interest rate rose from 1.35 percent to 1.61 percent. This value was already reached at the beginning of 2021, but then fell again over the course of the year.
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Fear of inflation drives interest rates
Moneyland.ch explains the increase with the fears of market observers of a sustained higher inflation. The central banks could react to this by increasing key interest rates, which in turn would drive up mortgage rates.
However, the assessment does not match the expectations of the KOF economic research center at ETH Zurich. In its current forecast, this is only assuming an inflation rate of 0.5 percent in Switzerland. In the long term, inflation will level off at a value well below one percent. The KOF also expects inflation to normalize in the EU and the USA.
Interest rates remain at a low level
In its Real Estate Monitor Switzerland published in September, Credit Suisse expects only a slight increase in interest rates for fixed mortgages over the next 12 months. An increase in the key interest rate by the SNB is also not expected by the end of 2022.
Viewed over a longer period of time, interest rates are still at a very low level. The interest rate for 10-year fixed-rate mortgages fluctuated between 2 and 3 percent at the beginning of the 2010s and before that it was sometimes even above 4 percent, as the CS figures show.
