Interest Rates on Short- and Medium-Term Mortgages Fall Again
The interest rate differential between long-term and short-term fixed-rate mortgages has widened further. This is the conclusion of the comparison service moneyland.ch.
The mortgage index of the online portal shows falling interest rates. The rates for fixed-rate mortgages with short and medium terms are at their lowest level in over three years. Five-year fixed-rate mortgages currently stand at 1,25 percent, while two-year ones are at 1,12 percent. For long-term fixed-rate mortgages, the decline has been less pronounced since June 2024, making the yield curve significantly steeper than it was a year ago.
Mortgage interest rates have been generally declining since mid-March this year. One year ago, five-year fixed-rate mortgages averaged 2,33 percent, more than one percentage point higher. Two-year fixed-rate mortgages were quoted at 2,31 percent in early June 2024—more than twice as high.
Ten-Year Rates Declining Less Sharply
Ten-year fixed-rate mortgages have fallen less sharply over the year. They currently stand at 1,62 percent, still significantly higher than at the beginning of the year and also slightly higher than in early 2022. As a result, the interest rate gap between long-term and short-term fixed mortgages is much greater than a year ago, and the yield curve has become noticeably steeper.
«The prospect that the Swiss National Bank (SNB) could lower the key interest rate to zero or even into negative territory has pushed down rates for short-term fixed-rate mortgages more than for long-term ones,» says Felix Oeschger, expert at moneyland.ch.
Further Cuts Already Priced In
An anticipated further rate cut by the SNB is already priced into the mortgage rates for fixed-rate mortgages. Should the SNB significantly reduce the key interest rate below 0 percent in its upcoming moves, a further decline in mortgage rates could be expected.
The inflation data for May currently does not stand in the way of further monetary easing. Inflation compared to the same month last year was even slightly negative at 0,1 percent.
