Mortgage Tools Modest Rise in Long-Term Fixed Mortgage Rates Expected

Modest Rise in Long-Term Fixed Mortgage Rates Expected

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Switzerland's GDP growth is forecast at 1.5% in 2017, a similar pace to last year. More and more export sectors are regaining competitiveness, but there are a lack of growth catalysts in the domestic economy. Downside risks remain, as growth remains heavily dependent on the exchange rate of the Swiss franc and the economic situation in the rest of Europe. However, inflation is likely to move back above zero in 2017, although at an expected 0.5% it will remain low. The Swiss National Bank (SNB) can therefore continue to put the exchange rate at the forefront of its monetary policy. The target range for SNB policy rates is thus likely to be left unchanged at between -1.25% and -0.25% over the coming 12 months. We therefore expect interest rates on flex rollover mortgages to remain at their current lows over the next year. Rates on medium and long maturity fixed-rate mortgages rose significantly following the US presidential election, but fell back again a little around the turn of the year. We expect rates on medium and long maturities to rise modestly by 10 to 25 basis points from current levels over the next 12 months. In short maturities we are expecting rates to move sideways. As in recent weeks, however, there is the potential for both upward and downward spikes in interest rates in all maturities again in 2017.

Source: Credit Suisse, Datastream. Last data point: 09.02.2017

  Interest rate
Forecasts for
  09.02.2017 3 mths 6 mths 12 mths
Flex rollover mortgage1
1.02% 1.02% 1.02% 1.02%
Fix mortgage (3 years)2
1.04% 1.05% 1.05% 1.05%
Fix mortgage (5 years)2
1.24% 1.35% 1.35% 1.35%
Fix mortgage (10 years)2
1.84% 1.90% 2.00% 2.05%
Fix mortgage (15 years)2
2.27% 2.35% 2.40% 2.50%

The interest rates listed are indicative values and apply to top-quality residential property and borrowers with impeccable creditworthiness.

1 Flex rollover mortgage (framework term three years). Interest rate based on three-month CHF LIBOR. Interest rate adjusted every three months.
2 Fix mortgages. Fixed term and interest rate for the entire term.