Mortgage Tools Further Upward and Downward Spikes Likely in Fix Mortgage Interest Rates

Further Upward and Downward Spikes Likely in Fix Mortgage Interest Rates

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Source: Credit Suisse, Datastream. Last data point: 06.03.2017

Switzerland's GDP growth is forecast at 1.5% in 2017, a slightly stronger pace than last year. More and more export sectors are regaining competitiveness, although the domestic economy lacks additional growth catalysts. Downside risks persist, with growth heavily dependent on the future direction of the Swiss franc and the European economic situation. The rate of inflation is likely to return to positive territory in 2017, although at an expected 0.5% it will remain at a low level. The Swiss National Bank (SNB) can therefore continue putting the exchange rate at the forefront of monetary policy and is likely to leave its target band for key interest rates unchanged at between –1.25% and –0.25% over the coming 12 months.

We therefore expect interest rates for Flex rollover mortgages to remain at their current lows over the next 12 months. Rates on medium and long maturity Fix mortgages rose significantly following the US presidential election, and have remained highly volatile since the end of 2016. We expect interest rates for mortgages with a medium or long term to show a slight rise of 5 to 25 basis points from their current level over the next 12 months. A sideways movement is anticipated in the case of mortgages with a short term. As in recent weeks, however, upward and downward spikes must once again be expected in 2017 for all maturities.

  Interest rate
Forecasts for
  06.03.2017 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
1.26% 1.30% 1.30% 1.35%
Fix mortgage (10 years)2
1.84% 1.95% 2.00% 2.05%
Fix mortgage (15 years)2
2.27% 2.35% 2.40% 2.45%

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.