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Old 10.09.2011, 10:28
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Higher deposits required from 2012 for property purchase

I just read this article: link

anyone have any idea how much more is going to be required or links to news articles.

As if finding 20% + all costs + rest of costs is not huge already

We had meeting for mortgage on Monday with Postfinance and they cannot agree deal until the build is complete which is next year. This feels like the hardest and most stupid thing I have tried to do in my life at the moment.
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Old 10.09.2011, 10:32
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Re: Higher deposits required from 2012 for property purchase

Aren't they talking about those cases where the banks accepted a 10% down payment? Or lower than 20% anyway? To be fair, I think low down payment costs plus low interest is part of the reason why people are paying prices that are beyond any reason at the moment, so it could be a good thing - long term.
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Old 10.09.2011, 10:36
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Re: Higher deposits required from 2012 for property purchase

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Aren't they talking about those cases where the banks accepted a 10% down payment? Or lower than 20% anyway? To be fair, I think low down payment costs plus low interest is part of the reason why people are paying prices that are beyond any reason at the moment, so it could be a good thing - long term.
Agree, but in our case we have to pay for all modifications done to the apartment + lega costs + taxes which = 40% of purchase cost already, which is a lot for us, not much left being honest. If they come back and ask for 30% deposits then we need to find another 10% and that is going to cause some problems for us.

Maybe I should try a few more banks before hand and see if they can at least agree the deal now, but obviously subject to completion of works, contract etc.
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Old 10.09.2011, 10:44
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Re: Higher deposits required from 2012 for property purchase

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We had meeting for mortgage on Monday with Postfinance and they cannot agree deal until the build is complete which is next year. This feels like the hardest and most stupid thing I have tried to do in my life at the moment.
i never heard about having to wait until build is complete before. I am living somewhere with a 10% deposit which was unbuilt when arranged, and i have a similar arrangement for the house we will move to next year (renovation). This one is through CS, next is with Valiant.

Almost always with a new build, you need to pay in advance of completion for the cashflow of the builders, so its normal to do.

One tip is to find the bank who are financing the build and do the mortgage through them. They were aware of the project so security had already been established and as such, we got around 0.5% better than the market rates when we signed
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Old 10.09.2011, 11:03
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Re: Higher deposits required from 2012 for property purchase

Serious yet simple basic question: I've heard quite often Swiss people express fear of real estate bubble. Is this risk a major issue in real grown up politics or is it just people´s talk ?
I am asking because it wouldn't be the first time I've the impression lots is done to avoid pressure on real estate market, as if keeping people in renting accomodation was a goal in itself of the big politics. Correct me if I'm wrong, but short explanations would be nice.
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Old 10.09.2011, 11:15
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Re: Higher deposits required from 2012 for property purchase

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Serious yet simple basic question: I've heard quite often Swiss people express fear of real estate bubble. Is this risk a major issue in real grown up politics or is it just people´s talk ?
I am asking because it wouldn't be the first time I've the impression lots is done to avoid pressure on real estate market, as if keeping people in renting accomodation was a goal in itself of the big politics. Correct me if I'm wrong, but short explanations would be nice.
Prices now are about the same as the bubble prices 30 years ago. Rising house prices will eventually cause higher rents & inflation. The Swiss do not like the idea of inflation so restricting mortgage finance would be a good move especially with low interest rates.
Of course they could just introduce a multiple of earnings, which was 3 when I first bought in the UK. That would have a serious effect IMHO.
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Old 10.09.2011, 12:35
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Re: Higher deposits required from 2012 for property purchase

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I am asking because it wouldn't be the first time I've the impression lots is done to avoid pressure on real estate market, as if keeping people in renting accomodation was a goal in itself of the big politics.
Not sure where you have ever seen that because the whole point with pushing people into real estate is that it assists the banking sector through fees and mortgages and local government who can milk stamp duties and taxes - and those two represent the bulk of influence. In other words, more vested interests encourage diving into housing than not, with the exception of Switzerland which is the only place I havnt heard 24/7 discussions on property (until now). The big politics is just trying to discourage the potential for housing bubbles which can decimate economies.
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Old 10.09.2011, 18:51
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Re: Higher deposits required from 2012 for property purchase

We are about to purchase a property in Spain and the best mortgage i got offered was with Lloyds Tsb international off shore banking
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Old 10.09.2011, 19:17
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Re: Higher deposits required from 2012 for property purchase

I was surprised, too.

This is (in German) the original announcement:
http://www.news.admin.ch/message/ind...e&msg-id=40629

As suggested, this is meant to help enforce the 20% rule.
Banks will be free to continue to finance objects even with less than 20% deposits - but they will have to reserve additional money to back these loans.
As it's going to come from their own pockets, few will want to do that...
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Old 10.09.2011, 19:39
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Re: Higher deposits required from 2012 for property purchase

i was waiting to see what measures they would bring in as i figured they would need to do something to counteract a housing boom as a result of the SNB peg.

i couldn't quite figure it out from the article (german not good enough) but could make out 3 possible things:

- increased reserve requirements for mortgage assets (given what has happened in the US and rest of europe, this would be a very good thing!)
- stricter enforcement of the 20% deposit (again, a good thing, having seen what happened with the 100%+ mortgages in the UK and Ireland)

ultimately, i think increased reserve requirements for mortgage assets might be the way to go, as we have seen banks are willing to do anything to cash in on such a housing boom (esp. since they are happy to pass non-performing loans to suckers/taxpayers).

any deposit/income multiple is likely to be worked around or ignored through fraud (as happened in the US and rest of Europe).

although I recently bought a place to live in, i am now interested in buying a second place purely for speculative reasons. the SNB peg/QE could create a massive housing boom and i'm happy to ride that wave.
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Old 10.09.2011, 20:24
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Re: Higher deposits required from 2012 for property purchase

We did speak to Credit Suisse earlier in the year and they wanted everything and at the time offering us a bad deal. They wanted to take a charge on a small Ski Chalet we have, what was my bonus going to be, have you more assets you can pledge. Very hard sell and such a poor deal.

If it is just enforcing 20% cash then we should be okay as we literally have paid cash, no pledge of pension or anything else like that.

The property is supposed to be part of affordable housing but the terms means you have to pay upfront for any upgrades to the specification, again more cash and you can only borrow 80% of the value net. Hope that makes sense

However the windows are in and almost all of the outside insulation is almost complete.
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Old 10.09.2011, 20:30
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Re: Higher deposits required from 2012 for property purchase

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i was waiting to see what measures they would bring in as i figured they would need to do something to counteract a housing boom as a result of the SNB peg.

i couldn't quite figure it out from the article (german not good enough) but could make out 3 possible things:

- increased reserve requirements for mortgage assets (given what has happened in the US and rest of europe, this would be a very good thing!)
- stricter enforcement of the 20% deposit (again, a good thing, having seen what happened with the 100%+ mortgages in the UK and Ireland)

ultimately, i think increased reserve requirements for mortgage assets might be the way to go, as we have seen banks are willing to do anything to cash in on such a housing boom (esp. since they are happy to pass non-performing loans to suckers/taxpayers).

any deposit/income multiple is likely to be worked around or ignored through fraud (as happened in the US and rest of Europe).

although I recently bought a place to live in, i am now interested in buying a second place purely for speculative reasons. the SNB peg/QE could create a massive housing boom and i'm happy to ride that wave.
It's the same in the UK, if the loan is above 65%, it will cost far more as the banks need more reserves. For 100% loan the bank needs 10 X the capital needed for a 65% loan. It's the new Basel ruling on banks solvency.
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