Why would an interest increase of 3% jeopardize so many real estate loans?

Not too concerned myself. Appreciation has raised the ownership rate of objects massively these past years so most mortgages will not be at risk I think, except maybe the people who bought at stretched valuations for a stretched financing during the last 2 years.

according to this article, if 10 percent of the morgages will default / not pay, that’s more then the capitalization of CS and UBS together (which also says CS is instantly bankrupt :stuck_out_tongue: ).
So we might face some huge walls of worries rather sooner (2023) than later (2024+).

Yeah sure but why should 10% of them default at a rate slightly above 1% if they all need to be able to sustain 5%++ (++ because paying 33% of your income towards mortgage does not make you default either directly)…

I think the market may cool down but so far it seems not dramatic to me.

I think the point is that even if you could pay 5% it’s a total different story. In my case if I remember the calculations well the monthly cost at 5% would be 3000 CHF. While it’s not impossible to pay that it would still mean a huge impact for us. my saving rate would decrease significantly. However, this is the reason of the 3a investment that we did. To pay back partially the mortgage in case the interests raises significantly at the due date (2027). Of course if you spent everything already now on blackjack and hookers you might face an issue :wink:

c’mon, blackjack is a total waste, man! :cowboy_hat_face:

yeah they should be able to sustain at 5%, but I bet that most of the home owners in the last 5 years never would have bought property at 2 or 3% of interest, they would still be happily renting.
If it indeed goes to 3+% on the SARON in the next years, I expect a lot of market activity from people who on paper could afford the house, but don’t want to keep pumping money into interest (instead of amortization) and will rather go back renting.

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That will e interesting indeed. I think it’s one thing to reconsider buying a house now with 3% or more but it’s another thing to actually sell your house where you live in and have converted it into your home. But yes it will be definitely interesting in the next year maybe there will be some good buy opportunities (if you still have money)

while I do agree that it will hurt to pay 3+%, I doubt that those people will so readily go back to renting. That’s a huge change.