Swiss Fixed Mortgage Rates: Analysis & Expert Tips

Switzerland, with its robust economy and stable financial system, has always been a barometer for global financial markets. In this context, the interest rates of fixed mortgages provide a valuable insight into the country's economic health and upcoming monetary trends.

I. Introduction

Switzerland, a mountainous country in Central Europe, is renowned for its economic and financial stability. Recently, the landscape of interest rates for fixed mortgages has undergone significant changes. This article delves into these shifts and their implications for borrowers and investors.

II. Swiss Economic Context

At the beginning of the year, the Swiss economy showcased attractive growth. However, this growth might slow down in 2023, even though there's no looming threat of a recession. The Swiss Gross Domestic Product (GDP) is projected to increase by 0.9% this year.

III. Inflation and its Impact

Inflation is a key indicator for any economy. In Switzerland, it fell below 2% for the first time since January 2022, standing at 1.7% in June. However, with the rise in prices, especially rents, it's expected to exceed 2% in the coming months.

IV. Key Rates of the Swiss National Bank

The Swiss National Bank plays a pivotal role in determining interest rates. Responding to inflation trends, it plans to raise its key rates by 25 basis points to 2% in September. This decision might influence the interest rates of mortgages.

V. Evolution of Mortgage Interest Rates

Fixed mortgages are home loans with a fixed interest rate. Here are the current rates and their forecasts for the next 12 months:

• SARON Mortgage (1 month): Currently at 3.09%, forecasted to be 3.35% for the next 12 months.

• 3-year fixed mortgage: Currently at 3.32%, forecasted to be 2.75% in 12 months.

• 5-year fixed mortgage: Currently at 3.26%, forecasted to be 2.80% in 12 months.

• 10-year fixed mortgage: Currently at 3.25%, forecasted to be 2.90% in 12 months.

Perspectives: The interest rates of fixed mortgages have recently increased due to high inflation and key rate hikes. However, they are expected to decrease by 35 to 60 basis points over the next 12 months.

VI. Credit Suisse Recommendations

For a good balance between flexibility and security, it's recommended to combine different mortgages and durations. Three strategies are proposed based on the client's risk profile: Security-focused, Balanced, and Dynamic.

Conclusion

The interest rates of fixed mortgages in Switzerland reflect the country's economic health. By understanding these rates and their fluctuations, borrowers, investors, and policymakers can make informed decisions for the future.

**Source :**Credit Suisse

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