Swiss National Bank Interest Rate Cuts Halve 10-Year Mortgage Costs

Discover how the Swiss National Bank (SNB)'s rate cuts have significantly reduced 10-year fixed mortgage costs, as revealed by Comparis.

Interest rate reductions orchestrated by the Swiss National Bank (SNB) have effectively halved the financial burden associated with servicing 10-year fixed-rate mortgages, a significant shift from the peaks observed in 2022, as reported by the online comparison platform Comparis. In the third quarter, the average rates for ten-year fixed mortgages, as calculated by Comparis, fell within the range of 1.5% to 2.0%, while Saron-based loans hovered between 1.6% and 2.0%. This relatively attractive rate environment has sparked robust demand; a striking 72% of respondents who recently secured home loans opted for a ten-year fixed-rate mortgage, a marked increase from the 40-50% range noted in the preceding two quarters. Conversely, the share of medium-term mortgages—specifically those spanning four to six years—plummeted to 14%, a halving over the span of just three months. Furthermore, three-year mortgages, including those tied to the Saron rate, dwindled to a mere 7%, down from a more substantial 20% previously.

The downward trajectory of indicative ten-year mortgage rates has remained steadfast since June. By the conclusion of the third quarter, these rates settled at 1.81%, reflecting a decrease of 0.33 percentage points since the end of June. For five-year rates, Comparis reported a figure of 1.68%, which represents a reduction of 0.36 percentage points over the same three-month period. At the dawn of January, these indicative rates were notably higher, standing at 2.26% and 2.13%, respectively. Additionally, the yield on ten-year Swiss government bonds was recorded at 0.41% at the end of September, marking a decline of 0.25 percentage points since the year's commencement.

In September, the Swiss National Bank (SNB) executed a key interest rate cut of 0.25 percentage points, bringing the rate down to 1%, marking the third consecutive reduction of this magnitude. This trend of monetary easing is not isolated to Switzerland; major central banks globally are also adopting similar strategies. The US Federal Reserve, for instance, made headlines by slashing its rate by 0.50 points, now targeting a range of 4.75-5%. Meanwhile, the European Central Bank has set its key rate at 3.5%, following a modest 0.25% cut. In this intricate dance of monetary policy, one can only wonder: are we witnessing a global trend towards lower rates, or merely a temporary reprieve in the face of economic uncertainty?