Growing inflation and threats of a consequent rise in interest rates mean mortgage rates look set to climb in 2022 in Switzerland.
Swiss independent financial comparison service Moneyland said the underlying financial conditions made mortgages more expensive for banks and financial institutions, most of which would pass these costs onto mortgagors.
2021 saw a price rise of between 0.15 and 0.22 percent. While this may not appear to be significant, the costs can be considerable in five or six-figure mortgages, particularly those with a longer duration.
According to Moneyland, who compared the offers from 140 different mortgage providers in Switzerland, prices have risen by 0.01 to 0.03 percent in 2022.
In October 2021, Switzerland’s inflation rate rose by 0.3 percent to 1.2 percent, notes the Federal Statistical Office. This is the highest figure since August 2018 and the equal highest monthly increase at any time over the past decade.
Inflation in 2022 is expected to average 1.1 percent across the whole year. While this is high by Swiss standards, it is much lower than most other countries.
That said, it will still likely lead to interest rate increases, which will in turn be felt by people with mortgages.
“Due to the high inflation rates, some central banks have signalled possible increases in key interest rates,” Moneyland writes.
“Even if the Swiss National Bank (SNB) has not sent such a signal so far, most market observers are expecting interest rates to tend to rise this year.”
Moneyland expert Felix Oeschger said the trends look set to continue for the longer term, particularly as experts have warned inflation looks set to continue, due at least in part to the Covid pandemic.
“It is quite possible that we will never again reach the historic low mortgage interest rate of August 2019,” Oeschger said.