Saron or fixed-rate mortgage? Analysis of the Swiss mortgage market 2023

Saron or fixed-rate mortgage? Analysis of the Swiss mortgage market 2023

According to a report by www.fuw.ch,
Switzerland has one of the highest mortgage debt levels in the world, which is causing nervousness due to high property prices and the high proportion of mortgage debt in income. Nevertheless, according to the International Monetary Fund (IMF), Switzerland is not the most vulnerable country in Europe in terms of debt risk.

In Switzerland, the key interest rate is still 1.75%, which is well below the international average. In addition, the loan-to-value ratio in Switzerland must not exceed 80%, while in other countries a higher loan-to-value ratio (LTV) is permitted.

The market is also stabilized by the comparatively low proportion of non-fixed interest money market mortgages. Despite the interest-related increase in Saron mortgages in 2022, their share of the total loan portfolio is only 23%. However, Saron mortgages have recently become less attractive, as fixed-rate mortgages with longer terms are currently being offered at lower interest rates.

Overall, these factors show that, despite high mortgage debt and price fluctuations, the Swiss real estate market remains stable thanks to low interest rates and strict credit regulations. This should reassure potential investors and buyers and increase confidence in the property market.