Will US interest rate increases impact SNB & Mortgage Libor rates?


#1

Sorry for the noob question - but typically will we see Libor rates in CH increase?

https://www.npr.org/sections/thetwo-way/2018/03/21/595264873/feds-new-chairman-steps-into-spotlight-amid-an-expected-rate-increase

SNB outlook seems stable at the moment looking at last news from them:


#2

We will definitely see rates rise in CH, the question is when? :wink:
Most reports point at CH waiting for ECB to raise rates first, which has been predicted to be “probably not before 2019”.
Time will tell.


#3

Thanks for the comment. Might look to lock in a longer term fixed rate - something like 5-10yrs as I feel we are coming toward the end of these low rates. Would hate to see my Libor rate spike!


#4

Libor for mortgage purposes has been floored at 0% for a long time now. If you took such a mortgage over a cheaper fixed term the joke’s on you


#5

Not possible to my knowledge to get a cheaper fixed term than the the current 3mth Libor rate. 3mth Libor mortgage is about 0.8% with a bank, you’d never get 0%. A fix rate over 5-10yrs you are looking at roughly 1.25-1.8% depending on where you go. do you have a mortgage currently?


#6

Mortgage loan rate consists of interest (the cost of lending the money) and margin (what the bank earns).

In a LIBOR loan, the interest is the LIBOR rate (currently -0.74%), and the margin could be something like 0.8%. However, nobody offers LIBOR loan with a total rate close to 0.1%, you will rather find 0.8%. LIBOR is “floored” at 0.0% + margin of 0.8%. I guess that’s what @hedgehog means.

Although what I don’t get is where can you find a fixed mortgage for lower than 0.8%.


#7

thanks for clarifying, was also my understanding.

Not saying you can get a fixed rate for 0.8%, but a 3mth Libor rate with bank is possible


#8

2-3 year fix is cheaper than libor

And it gives you a better certainty too. Libor is essentially 3 month fix with some strings attached