Swiss mortgage rates of 2023-2024

Updated on November, 21st 2023.

Regarding mortgage rates, time had a way of arranging things

While these crazy savings were truly exciting, I cannot say that I am hyped about the mortgage rates. It is just like stars in a sky red from the Thunder, you can barely see them.

Of course, Switzerland has always put obstacles in the way of those wanting to become property owners. Here, the American dream’s cost is very precise: at least 20% of the total value of the relevant property.

A major obstacle which explains why only a third of Swiss households own there housing, compared with a good half in France and, an impressive number, 3/4 in Italy. 

That being said, even in the most total darkness there is always a ray of light. Be it even just a spark, that might start the most majestic of fires. This spark, is the mortgage loan. 

Fluctuating between one and 2% in 2020, it is at historically low rates. To put that in perspective, in December 2008, the average interest rate was 3,45%. 

Fluctuating at around 4% in 2008, mortgage rates have fallen to the satisfaction of buyers and brokers to reach historically low rates in early 2020. Rates that can fall below 1% for 10 years! I don’t know if we can talk about the good old days, but what is certain is that those days are over. We are currently in a reverse dynamic, mortgage rates are getting higher and higher….

Real estate market through the ages

When I started writing this article in 2020, we were at the lowest level, what more can I say? We couldn’t have asked for anything better. Rates were hovering gently between 1% and 1.5% at 10 years.

Mortgage rates from 2008 to 2023
Figure 1: Mortgage rates from 2008 to 2023

In other words, by realising my dream of buying a house for CHF 770,000 I made a gigantic saving compared to a similar rental. A handful of months later, the conclusion is dry… The entire savings have almost vanished.

Capture decran 2022 11 22 174436

We are looking at long term (10 year) fixed rates in this article and more specifically in this example, but be aware that this is not the only option. Borrowing rates can be set for much shorter periods of time which can, in theory, significantly lower the rate. As strangely as it may seem, this is not always the case. In mid-2023, we saw a more or less inverted yield curve: a longer borrowing period does not necessarily mean lower rates.

Is real estate still attractive in 2023-2024 despite these mortgage rates?

Between COVID, war, shortages, climate changes… We can’t say that everything is going well… and when things are going badly in real estate, it’s because rates are rising.

What is certain is that we are not likely to see rates below 1% again any time soon. On the other hand, it is possible that certain problems that still have a chance of being resolved in the short/medium term could be resolved and gradually curb the rise in mortgage rates.

Another thing that seems fairly certain is that in the period 2023-2024, rates will never be locked in for long, up? down? No one will know in advance. Should you still buy your house or investment property? Should you wait for a lull before resuming the process? Good question.

What I can tell you is that the success of a real estate project will never rest exclusively on the mortgage contract that you sign. Of course the conditions will play a major role, but the tax system, the method of financing, the location of your property, the sale price and many other factors can have a massive impact on the quality of your purchase.

Financial institutions: important differences

A year ago I wrote here: “time seems to be doing things right concerning mortgage rates” now I prefer saying back to square one. But here are some tips on how you can lower your mortgage rate and generally improve your mortgage:

  • Compare mortgage offers: Always ask at least for two different offers and try not to follow blindly the good advice of your private consultant.
  • Mortgage volumes: It is likely that over the course of the same year, a bank run insurance meets its mortgage volume objectives and therefore increases the rates on purpose in order to reduce demand. 
  • Try to build a solid file: buying real estate property is similar to a rental request, the more the bank will feel like it can trust you, the more it is likely to grant your request and to do so advantageous terms (for the same property, different people will have different terms). Put yourself in the shoes of the person who is going to lend you the money, the more reassured you are by what you see the more likely you are to lend and potentially a larger amount. There are several ways to improve your mortgage file:
    • Photos of the real estate: As crazy as it may sound, photos play an important role. The more high quality photos you have that highlight the positive points of the property, the better the overall impression will be.
    • Work carried out: Providing a list of renovation work carried out in recent years to support the selling price can also help.
    • Improve your solvency: If you are waiting for a bonus, a raise, a debt that is due soon, then maybe wait a bit. Every point on your file that improves will have a significant impact and could help lower your mortgage rate.
  • Of the location: banks give priority to some files… It is nothing personal but they simply prefer to invest in what they consider to be promising properties or regions. Big institutions are more likely to accept properties in big cities, whereas small banks will be more interested in risks and will follow you to less central locations.

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