06.04.2021 – 00:30
comparis.ch AG
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Press release
Comparis mortgage barometer for the first quarter of 2021
Fears of inflation are driving mortgage interest rates to a 12-month high
Fear of inflation is causing mortgage interest rates to rise: the benchmark interest rates for ten-year mortgages reached their highest level in a year in the first quarter of 2021. This is shown by the current Comparis Hypobarometer. “Many believe that the pandemic will end soon. This is fueling the prospect of a global economic boom – with rising interest rates on capital, ”says Comparis financial expert Fredéric Papp.
Zurich, April 6, 2021 – The benchmark interest rate for ten-year mortgages was a little over 1 percent at the beginning of the year. At the end of the first quarter of 2021, the value is now 1.20 percent. At its peak, the benchmark rate climbed to 1.21 percent. This is shown by the data from HypoPlus, the mortgage specialist in the Comparis Group. That is the highest level in twelve months. In the same quarter of the previous year, mortgage interest rates rose to a maximum of 1.19 percent – driven by the corona shock. The benchmark interest rates on five- and two-year mortgages have risen less markedly. At 0.92 and 0.86 percent, they are slightly below the values for the same quarter of the previous year.
“Many believe that the pandemic will end soon. That is fueling the prospect of a global economic boom, ”explains Comparis financial expert Frédéric Papp. The downside: Fears of inflation are growing and capital market rates are rising. “Higher capital market rates, in turn, make the refinancing costs of mortgages more expensive,” said Papp.
Providers narrow margins, mortgage borrowers benefit
The higher refinancing costs are reflected in the development of the ten-year swap rate. This increased in the first three months of the current year by 35 basis points to a little more than zero percent.
However, mortgage institutions are by no means passing the swap increase on entirely to mortgage borrowers. That means: the prices have not risen as much as they could. On the other hand, the margin of the mortgage lender has decreased. Data from the mortgage specialist HypoPlus, which is part of the Comparis group, shows that the average benchmark interest rate rose by a mere 16 basis points in the first quarter. The best interest rate negotiated by HypoPlus by only 8 basis points. «This margin narrowing clearly shows that the supplier competition is playing. Mortgage borrowers benefit from this, ”says the Comparis financial expert.
A ten-year fixed-rate mortgage is available from 0.76 percent. This is shown by the data from HypoPlus. Compared to the target rate of 1.2 percent, the difference is 44 percentage points. Added to a mortgage of CHF 750,000, the potential savings are almost CHF 3,300 per year or CHF 33,000 for the entire term.
The yield curve has become steeper
The interest rate differentials between short, medium and long maturities increased in the first quarter of 2021. This is shown in the table below. “This is the result of inflation fears that have flared up,” says Papp. The difference between a ten-year and a five-year fixed-rate mortgage was 28 basis points at the end of March. A five-year fixed-rate mortgage is 6 basis points more expensive than a two-year.
The benchmark interest rates are average values. The specific negotiated contract is usually much lower.
additional Information
Frédéric Papp Finanzexperte Telefon: 044 360 34 30 E-Mail: [email protected] comparis.ch
Via comparis.ch
With over 100 million visits a year, comparis.ch is one of the most popular Swiss websites. The company compares tariffs and services from health insurances, insurance companies, banks and telecom providers and offers the largest Swiss online offering for cars and real estate. Thanks to extensive comparisons and evaluations, the company brings transparency to the market. In this way, comparis.ch strengthens the decision-making authority of consumers. Founded in 1996 by the economist Richard Eisler, the company now employs around 180 people in Zurich.
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