Almost 80 percent of the mortgage volume has a term of 10 years or more
The low interest rate environment and the professional intermediary segment are reducing mortgage rates for fixed-rate mortgages with long terms and helping them achieve a breakthrough. MoneyPark has analyzed over 18,000 mortgage cards over the past five years. In 2020, 55 percent of the brokered mortgage volume was taken out for ten years, at an average of 0.92 percent. A further 24 percent were fixed for an even longer term.
In Switzerland, the long-term fixed-rate mortgage is increasingly being used. A trend that has long been a fact in more transparent mortgage markets such as the US or the UK. Over the past four years, the average term concluded at MoneyPark has increased by one year to ten years. 79 percent of the brokered mortgage volume was taken out for ten years or longer. Abroad, the average terms are now well over ten years.
The ten-year fixed-rate mortgage is the most popular
The ranking of the most popular mortgage products has changed. Ten years ago the five-year fixed-rate mortgage was the first choice, today it is the ten-year mortgage with 55 percent of the mediated volume. Long-term mortgages with terms over ten years follow in second place as the big climbers. A quarter of the brokered volume was concluded in this way, meaning that its share has more than doubled since 2016.
Brokers and the low interest rate environment are increasing maturities
“In the past, banks preferred to sell shorter terms, also because, in relative terms, the” risk-return ratio “is better than with longer terms,” says Stefan Heitmann, CEO and founder of MoneyPark. The professional intermediary segment has given new providers such as insurance companies and pension funds access to the mortgage market and now allows mortgage borrowers to compare terms and prices. At the same time, the low interest rate environment favors the choice of a long-term fixed-rate mortgage because the interest rate differences between the terms are extremely small and the ten-year term is record-cheap. “It is a first that the average of our concluded ten-year fixed-rate mortgages is below one percent, namely 0.92, and also for the first time that it is below the average of the concluded money market mortgages (0.94%),” says Stefan Heitmann. Money market mortgages have been the big losers in the past four years. You have lost two thirds of the volume.
Age, income and type of property also influence the choice
In addition to interest rates, the age of the mortgagee also influences the choice of the product. Under 30-year-olds rely more than average (70% of the volume) on the ten-year term. A look at the income situation shows that the lower the income, the shorter the term of the fixed-rate mortgage and the smaller the money market share. High-income mortgage borrowers are more likely to have fixed-rate mortgages with maturities over ten years and have the highest percentage of money market mortgages. If you look at the financing of houses, 81 percent of the mortgage volume lies in a term of ten years or more. If an apartment is financed, it is 77 percent. In addition to the fixed-rate mortgage, expensive real estate is often financed with a second tranche, which is concluded as a money market mortgage or as a short to medium-term fixed-rate mortgage.
The Zurich region likes short-term, the Lake Geneva region the longest
In the Zurich region, 15 percent of the volume is still short-term and another 15 percent for a maximum of nine years. The situation is different in the Lake Geneva region, where almost a third (32%) is taken out for 11 years or more. French-speaking Switzerland protects itself longer than German-speaking Switzerland: as early as 2016, French-speaking Switzerland had an increase of ten years (75%). This proportion rose to 86 percent by 2020. German-speaking Switzerland, on the other hand, only graduated 51 percent with ten years plus in 2016. At 73 percent, it will follow the trend in French-speaking Switzerland towards long-term maturities in 2020.
Click here for the detailed study as a PDF.
MoneyPark – largest independent mortgage and real estate specialist
150+ Partner | 20+ Filialen | 3 Mia.+ Hypothekarvolumen p.a.
(Visited 5 times, 5 visits today)