Record low in mortgage rates
Anyone who bought a house or apartment in 2020 or who extended their existing mortgage has reason to be happy: Mortgage interest rates are at a record low. The fixed-rate mortgages are almost noticeable because they are the most popular form of loan and offer high interest savings. The savings that the Swiss were able to make in 2020 were even greater than they had been for five years. Those who negotiated well during this time were able to save between 16 and 20 percent compared to the standard rate. In the previous year, i.e. in 2019, the savings were even higher, the mortgages were around 22 percent cheaper than in 2018. The actual mortgage rates were therefore particularly low.
With smart calculations and skilful negotiations, tens of thousands of francs can be saved over ten years. It is above all the alternative providers who make particularly good offers. Pension funds and insurance companies stand out particularly clearly in comparison and offer high savings. The amounts that are possible as savings are always the comparative values to the reference rates published by the banks.
The low mortgage rates may have been at least partially decisive for the purchase, even if the prices for houses and apartments have increased significantly in the past year. Especially houses that are located away from the big cities and centers are in high demand. This is certainly not only due to the fact that the Swiss want to enjoy a little peace, but that they can also find it here in Corona times.
Big growth in pension funds
Insurance companies and pension funds are referred to as alternative providers, but they have grown steadily in the environment of permanent low interest rates. Pension funds in particular grew the most recently and were able to achieve growth of more than 36 percent between 2014 and 2019. At the end of 2019, assets under management were around CHF 18.6 billion.
The market share of the pension funds is still only 1.7 percent. The banks hold the majority, and here it is mainly the cantonal banks that hold assets of more than CHF 400 billion. But the pension funds are slowly becoming competition for the banks, because everyone with a correspondingly high income or verifiable assets can enjoy the advantages of the pension funds. They are much more flexible than the banks and offer variable mortgages in addition to fixed-rate mortgages. In some cases, it is even possible to get out of the fixed-rate mortgage free of charge, which is especially good for those who are planning to sell their property.
However, it is not possible for everyone to get a mortgage from the pension fund. The scope for granting the loans is very narrow. In some cases, the mortgages are only granted for private homes; holiday homes cannot be financed with them. But those who manage to graduate can benefit from very good conditions.
Pension funds even offer a return, so it is still worth investing in them. The risks are low.
However, experts assume that it will be years before pension funds can significantly expand their market share. In addition, many Swiss see their house bank as the bank they trust: Around 70 percent of Swiss people who want to take out a mortgage turn to their house bank first, and offers from competitors are rarely obtained.
Conclusion: take advantage of low mortgage rates now
Mortgage interest rates are lower than ever, which is particularly helpful for a planned purchase of a property, as property prices continue to rise. The offers of the pension funds are primarily of interest here, although they are not suitable for all. But it is worth taking a look at the competition from the long-established banks!
