The Swiss National Bank (SNB) could push the Saron rate back into positive territory next week, making mortgages indexed to this benchmark rate more expensive. (archive) KEYSTONE / PETER KLAUNZER sda-at
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–This content was published on September 14, 2022 – 08:57
(Keystone-ATS)
With further monetary tightening expected in Switzerland and the US next week, two-year fixed-rate mortgages have reached their highest level in a decade.
Ten-year fixed-rate mortgages are also approaching this record high.
In June, the Moneyland.ch mortgage rate index hit a 10-year high of 2.20% for two-year fixed-rate mortgages, 2.65% for five- and three-year mortgages and 0.08% % for those at ten years old. After a slight decline in July, rates resumed their rise in mid-August, Moneyland.ch wrote in a press release on Wednesday.
Currently, the index is at 2.44% for two-year mortgages, which is a new record. It is 2.59% for those at five years and 2.90% for those at ten, not far from the June level.
Saron-related mortgages remain cheap, but that could change as early as next week. Following the monetary policy decision of the Swiss National Bank (SNB) last June, the Saron rate did indeed rise, but remains in negative territory. Saron indexed mortgages are therefore currently made up only of the margin that is added to the rate.
But on 22 September, the SNB is expected to raise the benchmark rate. In the event of an increase of half a percentage point, the Sarons will find themselves in the positive. “Saron-related mortgages are very likely to get more expensive,” said Felix Oeschger, analyst at Moneyland.ch.
Next Wednesday, the US Federal Reserve (Fed) will announce its monetary policy decision, one day before the SNB. Markets are expecting hikes that are already priced in current mortgage rates. As for the SNB, observers expect an increase of 0.5 or 0.75 percentage points. Some even talk about the possibility of a 1-point tightening, which would push mortgage rates a little higher.
Future developments depend on inflation. “As long as central banks don’t control inflation, we can expect monetary tightening and mortgage rate hikes,” Oeschger said. But other factors come into play, notably the risk of recession in Europe, which could encourage central banks to slow the pace of rate hikes.
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