Increase in mortgage rates in the third quarter of 2024

Context

TL;DR

• Mortgage costs rose in the third quarter.
• The ten-year fixed rate was 2.07% at the end of September.
• The five-year rate was 1.9%; the three-year rate was 1.75%.
• The SNB kept the reference rate at 0%.

Key facts

• Period → third quarter
• Survey → end of September
• Ten-year fixed rate → 2,07%
• Five-year fixed rate → 1,9%
• Three-year fixed rate → 1,75%, compared with 1,38% three months earlier
• SNB → reference rate at 0%
• Basis for calculation → average of the rates of around thirty banks
• Comparison service → Comparis

At the end of September, the indicative rate for a ten-year fixed-rate mortgage stood at 2,07% in Switzerland. The figure, calculated as the average of the rates of around thirty banks, is reported by Comparis in a note. The report is marked with the Keystone-ATS designation.

The five-year rate stood at 1,9%, while the three-year rate was 1,75%. For the latter term, the level was higher than three months earlier, when it was 1,38%. The figures cover the third quarter and confirm an increase in the cost of mortgages compared with the previous three months.

The link with capital markets

The source links the movement mainly to the increase in interest rates on capital markets. For banks, this drove up refinancing costs, with an impact on indicative rates for fixed-rate mortgages.

The trend in foreign interest rates continues to be transmitted to the Swiss capital market. The SNB's reference rate, however, remains at 0%, while indicative rates for ten-year fixed mortgages exceed 2%. The note therefore links the increase in fixed-rate mortgage costs to capital markets, not to an increase in the reference rate that has already taken place.

Dirk Renkert, real estate expert for Comparis, writes in the note:

Dirk Renkert, real estate expert for Comparis, observes in the note that, in the short term, still-contained inflation should prompt the SNB not to rush to raise interest rates. At the same time, the more favorable economic outlook, the weak franc and higher energy prices have increased the likelihood of monetary tightening.

The source thus describes a possible tightening of monetary policy, but puts the SNB reference rate at 0%.

Operational details

Comparing terms

To understand the practical impact of the survey, the first criterion is to distinguish the mortgage term. The figures reported do not describe a single product: they compare three-, five-, and ten-year fixed-rate financing.

One parameter at a time

The sequence shows that, in the survey, the indicative rate rises as one moves from the three-year term to the five-year term and then to the ten-year term. The comparison with three months earlier is specified for the three-year term: from 1.38% to 1.75%. For the other terms, the source provides the level observed at the end of the period under consideration.

The statistical basis matters. Since the figure is derived from the average of the rates of around thirty banks, it represents a market benchmark and not a single bank's figure. To compare two indications correctly, it is therefore necessary to verify that the term is the same and that both cases involve a fixed rate.

The second element to distinguish is the SNB rate from the mortgage rate. The fact that the central bank's benchmark remains at 0% does not automatically bring fixed-rate mortgages to the same level: the source attributes their increase to capital markets and banks' refinancing costs.

There is also the twofold interpretation indicated by Comparis: inflation still contained in the short term, but more favorable economic prospects, a weak franc, and rising energy prices increasing the likelihood of tightening. To complement the rate comparison with a budget check, one can consult the costo della vita in Svizzera and use the calcolatore stipendio as a guidance tool.

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Key points

A verification procedure

Anyone considering a fixed-rate mortgage can turn the note into a comparison sheet without mixing different indicators. The procedure must remain anchored to the durations, periods and causes reported by the source.

Five operational checks

1. Start with Comparis's online price comparison service, cited in the note, and identify the reference period: the third quarter, with data collected at the end of September. 2. Choose only one duration for each comparison: three, five or ten years. Do not place values referring to different maturities on the same level. 3. Report the indicative rate corresponding to the chosen duration. For the three-year term, also note the previous available comparison, at 1,38% three months earlier. 4. Keep the BNS reference rate, at 0%, separate from the price of the fixed-rate mortgage. These are quantities mentioned together by the source, but they do not coincide. 5. Complete the reading with the factors indicated by Comparis: foreign interest rates, the Swiss capital market, banks' refinancing costs, inflation, the franc and energy prices.

This framework prevents an indicative rate from being turned into an automatic forecast. Instead, it makes it possible to check whether the comparison concerns the same duration and the same type of financing. The time dimension is equally important: the three-year figure can also be read in relation to the preceding three months, while the end-of-period level remains the reference for the other reported values.

Before using the figures for a personal assessment, it is advisable to keep the market snapshot and your own situation separate. The note does not provide an individual offer or a decision already made by the BNS; it describes the indicative rates and the factors influencing their trend. To check your monthly margin, use calcolatore stipendio.

Source: swissinfo.ch