Just comparing what I see today below:
versus, what I saw back in January.
10 year has gone from 1.45% to 1.64%.
Why is it going up instead of down? I thought central banks were cutting rates. I guess maybe mostly the US?
Rates from central banks are just a part of the whole calculation. There are further factors as liquidity cost, margin itself, risk costs, equity costs, process costs, etc.
Just because one component decreases, it does not mean, the client interest rate will decrease as well.
2 Likes
Is the benchmark rate for 10y fixed rates in CH. central banks only control short term liquidity rates and their outlook may impact longer maturity ones. However on the long end of the curve market sentiment is the main factor and they currently anticipate further borrowing from developed states because of military and retirement spendings. Also the change of geopolitical landscape introduces further risks long term that are being priced… That being said in CH the strong CHF and low government debt protect us from uncontrolled increase in basis points but the rise in interest rates across the EU and the US makes us go up as well…
2 Likes
Throwing out some paper files from years (long) gone by, and diligently looking through them before it goes into the rubbish bag.
Came across this comparison, in case anyone wants to use it for their negotiations at their bank, please feel free to! 
4 Likes
Makes me count my blessings! 
Anyone working at UBS has insights on construction credits? Like the conditions and potential range of rates?
I’m trying to understand if it makes sense to contact them or not (which requires a full folder, multiple phone calls and at least a week of analysis in my experience). My co-constructors were supposed to contact them but it’s going nowhere…
My benchmark is Migros Bank: 2.75% + 500 initial fee, no consolidation required. Anyone else I have contacted so far were consolidation only, or had a 0.25% per trimester fee (e.g. a nice hidden ~1% to the actual rate).
1 Like
I would just call them and tell them about the conditions offered by the “other” bank you have contacted. If they can’t match or beat them, that’s the end of the matter, isn’t it?
Looking at the rate question now.
I was happy to fix for 10 years when getting 1.5%. But now rates are zero so SARON gives you 0.8%-1% depending on the spread. Heck, even IBKR can get you to 1%.
But I wonder if I’m being tempted and should fix while rates are still relatively low, even if not as low as 6 months ago.
I’ve tried that with other banks. But it was always “I cannot tell you, we need to study the case and will come back to you”. Or they give me a rate, but “forget” the fee, even after I ask them about it. You only realise once you have the offer.
Construction credit is pretty different from a mortgage: much fewer options and very little visibility.
At least Migros gives you the conditions straight on their website, and they’re competitive to the best of my knowledge. If it was only up to me, I would have gone with them a long time ago, but we decided with the other couple (we’re building 2 semi-detached houses together) to use the same bank for the construction credit to make things easier. And they want to analyse the whole competition, but it’s not moving. (Sorry for the rant.)
A construction project is finished in 1 - 2 years, and even if the interest margin is higher, you only pay on what you actually use. What really matters, in my opinion, is what kind of mortgage you get after completion - you might be living in that building for the next 20–30 years.
Did you take the saron standard product or the flex one ?
I have a part of our mortgage as SARON Flex @ 0.6% all-inclusive
Two other parts
- 7 year fixed (entered into this agreement roughly a half a year ago) @ 0.95%
- 10 year fixed (entered into this 3 years ago or so) @ 2.7% and this is the part where amortization is going into to reduce mortage / interest expenses
Now I regret the 2.7% of course but at the same time it’s worthwhile being realistic and counting your blessings: here in Switzerland rates are extremely low. Rather than trying to squeeze the last bit out (e.g. by trying to time well) I think it’s better to have a good overall (blended rate) strategy and low stress.
2 Likes
The problem with mortgages is that you don’t have much ability time it even if you wanted to. You have to take what is on offer at the time.
At best you can secure a forward mortgage a year or 2 in advance, or go with SARON and hope rates fall.
That’s pretty good. I’d be happy with that!
Hi everyone,
I started the process of getting in touch with banks to secure a mortgage as we started to look into buying an apartment.
I reached out to UBS and ZKB and scheduled an initial meeting and got for Saron:
- 0.75-0.85% UBS
- 1%-1.05% ZKB
Are these the current rates?
Should we be looking at different options/using some sort of service to get the best deal?
Thank you!
Are those deals with no strings attached? If UBS is a bit cheaper, but wants you to do all your banking with them, it might be the best option.
0.75 is at the lower end of what I’ve seen….
With UBS does this include the flex option? They call it Saron flex.
UBS 0.75% would mean I would need to move my salary there which I think is reasonable. No other strings attached mentioned so far but as I said it was the first meeting.
We had an apartment in mind but it was sold before we had time to have the meeting.
@Ardius Not sure, he didn’t name the flex option. He just said it was Saron and could be for an “unlimited” term.
I am currently banking with ZKB so I was a bit surprised by the 1-1.05% margin, I sent a follow up asking if they would match UBS’s offer.
One plus for UBS was that the advisor proactively talking about us being an international couple and that if we were to leave Switzerland, it would be perfectly fine to keep the mortgage, especially if we rent out the flat when we leave. When I asked how this would be dealt with by ZKB, the advisor wasn’t 100% sure and asked for some time to check.
Even if we aren’t planning to leave Switzerland, it’s good to know that I wouldn’t need to sell the apartment because I can’t secure financing upon mortgage renewal.
You will always get a better offer when they sniff out a new customer and a banking relationship change.
2 Likes
I have never heard of a reputable bank bringing down the hammer on you(r mortgage) in case of moving abroad and renting the place out AS LONG AS you just keep paying your mortgage as per the agreement.
Why?
For them, yes - they can see immediately if there are any problems with your employment.