I don’t have any suggestions - it’s all market timing so it depends how much risk you want to take on, what you are comfortable with.
Right now I don’t see a meaningful short term safe return since short term rates are low. At the same time I have no intent to amortize right now when rates are this low.
In a higher rate environment presumable you could get a bit of interest while you keep it out of equities (even though you’ll pay some tax on that income)
Also it raises the question. What if you wanted to amortize 100k and notify them 6 months in advance. But later you want to back out of paying it say 1 month in advance because you left it in equities and the stock market tanks significantly (for example if an orange man decides to start a trade war with penguins)….
Might be worthwhile to ask and to see the fine print on that. I’d weigh any penalty with the risk of keeping it on the market
What I don’t like about the “3y” SARON is that the lender is handcuffing you from going open market for a fixed. So they can offer you worse fixed rates than the market if you decide to convert to fixed in that timeframe.
I feel my lender is fair with the 6 month notice period on SARON - you can go open market for a fixed to get the best rate (assuming you don’t have a fixed tranche with them as well).
Thanks, that is a valid point, but only partially as I was thinking of going 50-50 similar to you, so would be anyways handcuffed by the fixed tranche (SO dislikes risk on her 50% ).
On the good side, they gave me an offer for .65% margin which I believe is considered good nowadays.
I just updated my post to reflect that point and then saw your new post writing the same thing.
0.65 is good
My fixed tranche expires in about 1 year, when that happens I will go rate shopping likely for another 50/50 mix, or maybe a different ratio depending on where the rates end up at that moment.
What moves are we expecting for long term mortgages (7-10 years) in the next week’s/months?
I am unsure if I should fix now or speculate and wait a bit more. For me fixing at march levels would me more painful to me than fixing at current level and missing out on a bit lower rate. I think in the next 6 months we can at most go down a -0.3% max? While the changes of it going back up are higher.
I am holding out for < 1% 10y fix. Trump is a swiss mortgage client’s best friend.
CHF up, oil down…inflation is going to go turbo negative from April and SNB will be forced to cut rates into negative territory. Might not even wait for June if this continues.
Meanwhile I pay 0.66% with SARON so very happily waiting it out paying next to nothing. But for a say 0.95% fixed 10y I will happily convert 50% of my mortgage to fixed, just for the peace of mind.
It seems that rate cuts don’t influence long term mortgages, no? The last drop in rates for long term mortgages is connected to bonds yield, which is a result of Trump’s tariffs. Trump could remove tariffs next week because of all the pressure (even his buddy-buddy Elon now wants 0 tariffs for Europe) and mortgages would go back up again as fast as they went down, no?
@Cortana
You a are well known four your incredible timing on equities
Less for the SNB rate forecast for unknown reason. With the swaps turning negative can we expect a negative rate already in June?
they influence the short end of the curve… less likely to dramatically impact the long end (5y+) unless the market things the rates will stay low for a long time.
For both long and short ends, it also depends on what is “priced in already”
I don’t know why but I’m pretty good at interest rate forecasts
I excpect 0.00% in June for sure. But I think SNB will hesitate to go into negative territory again. Maybe they will first try to intervene on the FX market before going down that route.
By the end of year 2024 SNB had on its balance shit
-325 Bio USD
-293 Bio CHF
-302 Bio EUR
-10’000 JPY
-1000 Bio Others
-80 Bio of Gold
Given what the central Bank has already lost a lot this year. If that crisis carry on with rising Franc that sounds risky buying huge amount of foreign currency.
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With the swaps turning negative can we expect a negative rate already in June?
