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fixed-rate mortgages are in high demand. interest rate cuts in switzerland, the u.s., and the eurozone have caused mortgage rates for fixed-term loans to decrease in recent months. the gap between fixed-rate mortgages and saron-based mortgages has narrowed. the reference rates for fixed-term mortgages decreased over the third quarter. according to a market survey by the comparison platform comparis, the reference rate for 10-year fixed-rate mortgages stood at 1,81 percent at the end of september. compared to the value of 2,14 percent at the end of june, this represents a drop of 0,33 percentage points. the reference rate for 5-year fixed-rate mortgages fell by 0,36 percentage points during the same period, from 2,04 percent to 1,68 percent. although the interest rate gap between saron-based mortgages and fixed-rate mortgages has narrowed further with the third consecutive rate cut, fixed-rate mortgages are still slightly cheaper than saron-based mortgages, according to the mortgage barometer published on thursday. (graphic: comparis). «the market expectations for further rate cuts have already had a positive impact on the conditions for fixed-rate mortgages since june and in the following months, causing them to drop,» says comparis financial expert dirk renkert. as a result, despite another rate cut by the swiss national bank (snb), the conditions for fixed-rate mortgages are still more favorable than those for saron-based mortgages. after the rate cut, first-rank saron-based mortgages cost around 1,6 to 2,0 percent on average. in contrast, 5-year fixed-rate mortgages are being offered at around 1,4 to 1,8 percent, while 10-year fixed-rate mortgages range between 1,5 and 2,0 percent. given the existing uncertainties, many mortgage borrowers are opting for planning security. long-term maturities were particularly in demand during the third quarter. «the conditions for 10-year fixed-rate mortgages have almost halved from their peak in october 2022,» renkert adds. share of 10-year fixed-rate mortgages exceeds 70 percent. according to data from comparis partner hypoplus, around 72 percent of borrowers opted for a fixed-rate mortgage with a term of 10 years or more in the last quarter. previously, this figure was between 40 and 50 percent. as a result, the share of medium-term loans (4 to 6 years) dropped to around 14 percent from around 30 percent in the previous quarter. further rate cuts expected. in addition to geopolitical conflicts in the middle east and ukraine, economic risks are seen as contributing factors. structural problems in germany and the ongoing real estate crisis in china continue to weigh on consumer and business sentiment. falling inflation, driven by declining crude oil prices and the strong swiss franc, has lowered inflation expectations. looking ahead, further rate cuts are expected.
Fixed-Rate Mortgages Are In High Demand
Interest rate cuts in Switzerland, the U.S., and the Eurozone have caused mortgage rates for fixed-term loans to decrease in recent months. The gap between fixed-rate mortgages and SARON-based mortgages has narrowed.
The reference rates for fixed-term mortgages decreased over the third quarter. According to a market survey by the comparison platform Comparis, the reference rate for 10-year fixed-rate mortgages stood at 1,81 percent at the end of September. Compared to the value of 2,14 percent at the end of June, this represents a drop of 0,33 percentage points. The reference rate for 5-year fixed-rate mortgages fell by 0,36 percentage points during the same period, from 2,04 percent to 1,68 percent.
Although the interest rate gap between SARON-based mortgages and fixed-rate mortgages has narrowed further with the third consecutive rate cut, fixed-rate mortgages are still slightly cheaper than SARON-based mortgages, according to the mortgage barometer published on Thursday.
(Graphic: Comparis)
«The market expectations for further rate cuts have already had a positive impact on the conditions for fixed-rate mortgages since June and in the following months, causing them to drop,» says Comparis financial expert Dirk Renkert. As a result, despite another rate cut by the Swiss National Bank (SNB), the conditions for fixed-rate mortgages are still more favorable than those for SARON-based mortgages.
After the rate cut, first-rank SARON-based mortgages cost around 1,6 to 2,0 percent on average. In contrast, 5-year fixed-rate mortgages are being offered at around 1,4 to 1,8 percent, while 10-year fixed-rate mortgages range between 1,5 and 2,0 percent.
Given the existing uncertainties, many mortgage borrowers are opting for planning security. Long-term maturities were particularly in demand during the third quarter. «The conditions for 10-year fixed-rate mortgages have almost halved from their peak in October 2022,» Renkert adds.
Share of 10-year fixed-rate mortgages exceeds 70 percent
According to data from Comparis partner HypoPlus, around 72 percent of borrowers opted for a fixed-rate mortgage with a term of 10 years or more in the last quarter. Previously, this figure was between 40 and 50 percent. As a result, the share of medium-term loans (4 to 6 years) dropped to around 14 percent from around 30 percent in the previous quarter.
Further rate cuts expected
In addition to geopolitical conflicts in the Middle East and Ukraine, economic risks are seen as contributing factors. Structural problems in Germany and the ongoing real estate crisis in China continue to weigh on consumer and business sentiment. Falling inflation, driven by declining crude oil prices and the strong Swiss franc, has lowered inflation expectations. Looking ahead, further rate cuts are expected.
