Those who are with the right provider and negotiate well can withhold tens of thousands of francs over ten years. Pension funds often offer better conditions than banks.
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–The savings on mortgage interest last year were higher than they have been in five years.
Photo: Urs Jaudas
If you bought a house or apartment or extended your mortgage last year, you could save a lot on mortgage interest. This is shown by a recent study by the mortgage broker Moneypark. The interest savings on 10-year fixed-rate mortgages – the most popular form of credit among the Swiss when buying a home – were examined.
The savings in 2020 were greater than in the past five years. During this period, those who made good comparisons and negotiated were able to save between 16 and 20 percent compared to the standard rate. The benchmark rate is the average published interest rate of mortgage providers, in the case of the Moneypark study this is over 100 banks, insurance companies and pension funds.
Last year the mortgage was on average 22 percent cheaper. This led to a record low in mortgage rates actually concluded.
As illustrated by an example, this means: Anyone who has taken out a mortgage for CHF 750,000 will save CHF 19,500 over ten years. If you are also with the right provider, you save even more interest. Last year, it was mainly alternative providers such as insurance companies and pension funds that offered big savings: According to Moneypark, if you took out a 10-year mortgage with a pension fund, you saved a good 34,500 francs over ten years compared to the benchmark rate thanks to good negotiation.
Last year when the Real estate prices for single-family houses and apartments rose again are, these savings – including lower mortgage interest – should have contributed to one or the other purchase decision. So experienced for example Houses away from the centers or in holiday regions an increased demand. In addition to the low interest rates, this is also due to the current corona situation.
Free exit from the fixed-rate mortgage
Insurance and Pension funds have been mixing in the mortgage market for several years With. Because in the persistently low interest rate environment, like many investors, they are looking for returns. According to a Moneypark study from 2019, pension funds are among the providers that have grown the fastest in the past five years: With a growth of over 36 percent, they have expanded their mortgage volume more than twice as fast as the market since 2014 and managed to end 2019 estimated 18.6 billion Swiss francs.
Nevertheless, their market share remains small at 1.7 percent. The banks still hold the largest share of the mortgage pie – above all the cantonal banks with a current volume of over CHF 400 billion. Overall, the mortgage volume in Switzerland is over a trillion.
Those with a correspondingly high income or assets have an advantage with the pension funds.
But when it comes to supply, pension funds are slowly developing into competition with banks. If they originally opted for long-term fixed-rate mortgages, they now also offer variable mortgages. In addition, they are more flexible when it comes to the contractual conditions: For example, some offer a very cheap or even free exit from a fixed-rate mortgage, says Moneypark boss Stefan Heitmann. An advantage for anyone planning to sell their property. This is not possible with banks.
However, not everyone can simply apply for a mortgage from a pension fund. “The customer must meet the pension fund’s award criteria,” says Heitmann. They have less leeway than the banks. Some pension funds only grant loans for homes, but not holiday homes, or are looking for low-risk financing. This means: Those who can show a correspondingly high income or assets have an advantage. “Those who manage the deal, however, have a good interest rate,” says Heitmann.
Also last year should the pension funds grown far above the market besays the Moneypark boss. The reason for this lies in the negative returns on fixed-income investments. Investing in mortgages will certainly continue to be worthwhile. They promise with equally low risks Return. So the pressure remains: while pension funds replenish their portfolios, banks are keen to maintain their market share.
However, building a large mortgage portfolio takes time. It would be years before the pension funds had significantly increased their market share, says Heitmann. In addition, the house bank is still the number one point of contact for many Swiss people: Almost 70 percent of buyers turn to their house bank for financing advice, according to Moneypark, competing offers are rarely obtained.
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