Poll for homeowners: mortgage rumination

Real Estate
1

To people holding a Swiss mortgage: How much/often do you think about mortgage rates and what to do about your mortgage?

  • 4 times a month or more
  • 12 times a year (once a month) or more
  • A couple of times a year
  • About once a year
  • Less than once a year
0 voters

How worried are you about your mortgage rate going up and if not, why not?

  • Pretty worried
  • Somewhat worried
  • Not or hardly worried: my mortgage is so low in relation to my net worth or income that I wouldn’t be affected significantly
  • Not or hardly worried: I don’t believe rates will rise much
  • Not or hardly worried: other
0 voters
2

I have a simple way to go through life: taking decisions once and not revisiting them too often unless major changes happen. Adding to that is the concept of “good enough”. +/- 0.5% on my mortgage’s interests shouldn’t make or break my investing strategy.

I’d try to find a range of interest rates inside of which I’d be happy with my mortgage and consider them as a single “good enough” package, without much difference if the rates change within them.

Two questions I’d ask myself if I were spending a lot of time thinking about my mortgage:

  1. am I comfortable with the amount of mortgage I have taken or should I amortize more?

  2. are there other aspects of my life I could spend that time on in order to gain more overall benefits to my happiness (doesn’t need to be financial aspects, it’s just to put into perspective the opportunity cost of thinking about what should be a long term commitment).

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3

Thank you for the insight!

You inspired a second question.

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4

I’m on a combination of the two last ones for this one:

  1. I’ve taken my mortgage with an understanding that rates can go up significantly. There is enough room in my budget that I’m confident it can at first absorb an increase in interest rates and, as that happens, I’m pretty sure I’ll have the motivation to amortize more agressively and reduce the charge interest rates would be having on my budget. I’m confident I can deal with the non-amortizable part of my mortgage (100K) reaching the cap of interest rates that my bank could charge me (11%).
  1. I consider it possible for interest rates to reach something like 5% but pretty unlikely for them to reach 11%+. I’m expecting low to negative rates in the near future as the SNB tries to prevent the CHF from strengthening too much and I don’t expect the Swiss economy to overheat anytime soon.
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5

11% would mean massive inflation right?
Everything >5% should probably be taken with the grain of salt that it’s only going to happen with enough inflation that the principal is quickly going to be eroded away.
Timing might be tricky (how quickly can you get a raise to cover that 11% rate), but it’s probably not a situation that will be disastrous for years.

2 Likes
6

My current mortgage rate is so low that it’s obvious the next one will inevitably be higher. I’m already factoring in a higher rate for future planning.

As for interest rates, I’m not feeling much pressure at the moment since rates are still relatively low. I’m fortunate to be in a favorable period for considering renewal options. That said, my mortgage matures in 2026, and I regularly monitor the market to determine the best strategy either to lock in an early mortgage or to wait for the most favorable time to secure a new rate before the term ends.

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7

i have 2 mortgages. both fixed for 10 years and offset by 5 years so i have to renew every 5 years.

so i basically only every need to do stuff with the mortgage every 5 years, but will look 18 months ahead as that is when it is possible to start fixing and so you can actually actively do something then.

though i keep a tab on interest rates etc. more regularly as i’m interested in the economy and the state of the market.

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