Interesting things can be observed in the markets at the moment: yields are rising on the bond market, but the interest rates on mortgages hardly change at all. Since the beginning of January, the yields on ten-year Swiss government bonds (“Eidgenoss”) have risen continuously from -0.56 percent to -0.43 percent. A similar thing can be observed with ten-year US Treasuries, whose yields rose to over 1 percent in January for the first time since the outbreak of the corona pandemic.
The “Confederation” is actually one of the main drivers of mortgage interest in Switzerland. Normally in Switzerland, rising yields on long-term federal bonds lead to rising interest rates on mortgages with a long term. But a look at the development of the average ten-year mortgage rate shows that the interest rate has only increased slightly from 1.05 percent to 1.06 at the beginning of January. The overarching trend speaks a very clear language: interest rates have continued to fall unabated for years.
Average interest rate on ten-year fixed-rate mortgages (last 12 months)
Those: vermoegenspartner.com
Only the Corona crisis was able to halt this trend for a short time when the interest rates for ten-year mortgages averaged 1.15 percent. But the pre-crisis level of 0.98 percent currently seems to be within reach again.
One reason why mortgage rates are not rising despite rising bond yields is probably due to the expectation that overall interest rates will remain low for years. In the Corona crisis in particular, governments have to provide billions of dollars for economic support measures. According to experts, interest rates are unlikely to rise in the foreseeable future simply because of the ever-increasing national debt.
Comparison of providers: Cheap become cheaper, expensive become more expensive
Nonetheless, individual providers have made adjustments to long-term mortgage rates – albeit small ones. Data of the financial advice asset partner show that all in all the providers with higher mortgage rates continued to rise, while providers with lower mortgage rates anyway reduced them a little further.
According to Vermögenspartner, the cheapest option for a ten-year mortgage is currently the online service hypoclick, a subsidiary of the BSU cooperative bank. The interest rate is currently 0.767 percent, the same as in the previous month. These offers are of course “shop window prices” which require a good credit rating. However, mortgage interest rates can always be negotiated individually.
Interest on ten-year fixed-rate mortgages from various providers (selection)
| providers | Fixed rate mortgage (10 years) | tendency |
| hypoclick | 0.767 percent | → |
| Bühler Pension Fund | 0.790 percent | ↓ |
| Pensionskasse Post | 0.790 percent | ↓ |
| BVK | 0.800 percent | ↓ |
| Zurich Insurance | 0.810 percent | → |
| Lucerne pension fund | 0.850 percent | → |
| Crédit Agricole next bank (Suisse) SA | 0.840 percent | ↓ |
| Homegate | 0.880 percent | ↑ |
| Migros Bank | 0.880 percent | → |
| AXA Winterthur | 0.930 percent | ↑ |
| Baloise online mortgage | 0.930 percent | ↑ |
| Swiss Life | 1.090 percent | ↑ |
| Hypothekarbank Lenzburg | 1.180 percent | → |
| Graubündner Kantonalbank | 1.270 percent | ↑ |
| WE bank | 1.280 percent | ↑ |
| Swiss credit | 1.290 percent | → |
| Zuger Kantonalbank | 1.290 percent | ↑ |
| Zürcher Kantonalbank (ZKB) | 1,300 percent | ↑ |
| Raiffeisen | 1.350 percent | ↑ |
Those: vermoegenspartner.com
At the Bühler pension fund, the interest rate for a ten-year mortgage is currently 0.79 percent, which is slightly less than at the beginning of January. The same can be said for the Post pension fund in green. BVK’s interest rate has also recently dropped slightly to 0.8 percent. Raiffeisen Bank, on the other hand, has slightly increased the interest on ten-year mortgages. With an interest rate of 1.35 percent, it is the most expensive of the providers listed by VermoegensPartner. Zuger Kantonalbank and ZKB also adjusted their interest rates slightly upwards to 1.29 and 1.3 percent respectively.
Overall, mortgage interest rates remain low. Given that interest rates are likely to remain low for years to come, short-term mortgages that offer lower interest rates are definitely an option. A flexible Saron mortgage is also worthwhile in the current low interest rate environment. The only question is how long this will continue to apply. Ruling out noticeable interest rate hikes for the next few years should be a bet with good odds, but it remains a bet.
Interest rate curve for mortgage rates in Switzerland
Those: vermoegenspartner.com
Mortgage borrowers who are concerned about security are currently more than well served with a long-term mortgage. Because: The yield curve is extremely flat. This means that the average difference in interest rates between two-year mortgages (0.76 percent) and ten-year mortgages (around 1 percent) is historically low. Anyone wanting to take out a new mortgage now and value planning security is currently better served than ever with a ten-year term.
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