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  #41  
Old 22.09.2022, 10:42
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Re: Ready for higher interest rates?

When will savings accounts have their interest rate increased from appalling 0.01%? (in CS for example).
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  #42  
Old 22.09.2022, 10:44
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Re: Ready for higher interest rates?

Check out those mortgage rates!

https://en.comparis.ch/hypotheken/zi...insentwicklung

The ten year as an example - from around 1% in 2020 to almost 3% now.

Considering rental yields are around 3% - would there be any financial reason to buy? Of course, house prices may fall to accommodate higher yield...
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  #43  
Old 22.09.2022, 10:45
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Re: Ready for higher interest rates?

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When will savings accounts have their interest rate increased from appalling 0.01%? (in CS for example).
If UBS stop charging fees for accounts that would be enough for me...
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  #44  
Old 22.09.2022, 10:51
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Re: Ready for higher interest rates?

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You're right, I misread. 0.5% and not 50bps.
And there‘s been an interesting reaction in the FX markets. When I checked this morning EUR was 0.948 down overnight a reasonable amount, it‘s now climbed to 0.963. Similar movements in GBP and USD has also strengthened.
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Old 22.09.2022, 10:54
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Re: Ready for higher interest rates?

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When will savings accounts have their interest rate increased from appalling 0.01%? (in CS for example).
How are the savings rates appalling when the bank was paying 0.75% to hold your deposits?

It‘s hilarious that people expect 1% 10 year fixes on their mortgage and at the same time want to be paid a ‚non-appalling‘ amount of interest on their savings.

In answer to your question, I would expect interest rates on selected accounts to start to increase in the coming days. I don‘t expect you to be happy with what they increase to though.
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  #46  
Old 22.09.2022, 11:09
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Re: Ready for higher interest rates?

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And there‘s been an interesting reaction in the FX markets. When I checked this morning EUR was 0.948 down overnight a reasonable amount, it‘s now climbed to 0.963. Similar movements in GBP and USD has also strengthened.
BoJ, didn't adjust interest rates and have now intervened to stop Yen from plummeting. FX all over the place!
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  #47  
Old 22.09.2022, 11:42
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Re: Ready for higher interest rates?

Prices outside commuting distance of the big centres might be impacted, but as low-density housing supply is still low, it is still a sellers market...just perhaps that outrageous over-bidding might be coming to an end.

Houses in the areas we are looking are staying online much longer than they were a year ago.
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  #48  
Old 22.09.2022, 11:55
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Re: Ready for higher interest rates?

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BoJ, didn't adjust interest rates and have now intervened to stop Yen from plummeting. FX all over the place!
It will be interesting to see if BoJ eventually raise rates. I actually recently invested in Japan Tobacco in the hope that JPY eventually recovers.
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  #49  
Old 22.09.2022, 12:10
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Re: Ready for higher interest rates?

I guess, people actually make sure they can finance the property these days.
That takes longer than just calling and reserving and looking at the financing afterwards.

Before, you could be pretty sure you'd find some bank that valued the property at the sticker-price, so you didn't need to pony up all the difference between the actual value and the sticker price from your own pocket.
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  #50  
Old 22.09.2022, 12:20
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Re: Ready for higher interest rates?

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Prices outside commuting distance of the big centres might be impacted, but as low-density housing supply is still low, it is still a sellers market...just perhaps that outrageous over-bidding might be coming to an end.

Houses in the areas we are looking are staying online much longer than they were a year ago.
Prices are indexed every 3 months by Swiss Statistics Office. Indeed, single-unit home are more desired, more stable prices during last 3 years.

Any hiccup must be captured by these numbers. Results are published 6 weeks after quarter end, so next numbers come by Nov 15.

I'd usually say it's the moment to place your bets, but most people already placed their bets.



https://www.bfs.admin.ch/bfs/fr/home....23044039.html
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  #51  
Old 22.09.2022, 13:58
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Re: Ready for higher interest rates?

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In answer to your question, I would expect interest rates on selected accounts to start to increase in the coming days. I don‘t expect you to be happy with what they increase to though.
It has already started.
Yuh pays .25% on up to 25k since a few weeks ago, so may increase some more now.
WIR bank had increased to 0.05% in June, pays now 0.15% as of now.

What I don't understand is the CHF drop (-1.5% vs USD) despite the SNB rate hike. I would have thought that it makes the CHF more attractive.
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  #52  
Old 22.09.2022, 14:14
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Re: Ready for higher interest rates?

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It has already started.
Yuh pays .25% on up to 25k since a few weeks ago, so may increase some more now.
WIR bank had increased to 0.05% in June, pays now 0.15% as of now.

What I don't understand is the CHF drop (-1.5% vs USD) despite the SNB rate hike. I would have thought that it makes the CHF more attractive.
IANAFXS (I‘m not an FX strategist), but my guess is that the inflation number and the forecast despite increasing rates are both higher than the June forecast when rates were last increased. Realised and forecast GDP are also lower. In the press release it also mentions that the SNB is willing to be active in the FX markets. I don‘t know if this is new language or not. If it is, that could also have an impact.

ETA: and the 75bps increase was already priced in.

https://www.snb.ch/en/mmr/reference/...0220922.en.pdf
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Old 22.09.2022, 15:00
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Re: Ready for higher interest rates?

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It will be interesting to see if BoJ eventually raise rates. I actually recently invested in Japan Tobacco in the hope that JPY eventually recovers.
I guess that idea went up in smoke?

*I’ll get my coat*
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  #54  
Old 22.09.2022, 15:26
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Re: Ready for higher interest rates?

I finally realized that high inflation can be a real issue for borrowers at variable rate (or fixed rate but with high inflation factored in).
Let's compare two scenarios:
- zero inflation
- 7% annual inflation (100% in 10 years)

In zero inflation case the lender asks for some interest for his capital. After 10 years the lender has his original capital and the interest.

In the 7% inflation case during 10 years the borrower has not only to pay the rent, but also has to reimburse half of the capital destroyed by inflation.

Until recently, we had a scenario where the authorities made the interest rates too low effectively benefiting the borrowers, and if the lenders have not that many investment opportunities then they might be happy with lower interest but still, high inflation can be a big transfer mechanism from the borrowers to the state.
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  #55  
Old 22.09.2022, 15:29
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Re: Ready for higher interest rates?

The absolute winners are people locked in mortgages at below inflation, as they're currently borrowing in negative real rates.

These are the real winners.
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  #56  
Old 22.09.2022, 15:43
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Re: Ready for higher interest rates?

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The absolute winners are people locked in mortgages at below inflation, as they're currently borrowing in negative real rates.

These are the real winners.
Unless they end up with a heavy capital loss due to a property price decline?
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  #57  
Old 22.09.2022, 16:38
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Re: Ready for higher interest rates?

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Unless they end up with a heavy capital loss due to a property price decline?
Demand still outstrips supply in Switzerland, so I doubt this will happen.

A few years ago, two families bought the single house next door to us, and planned to demolish it and build a two-family house. After around 2 years fighting with the council they got modified plans approved, but I have heard that the blowout in building costs have endangered the project.
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  #58  
Old 22.09.2022, 19:58
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Re: Ready for higher interest rates?

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The absolute winners are people locked in mortgages at below inflation, as they're currently borrowing in negative real rates.

These are the real winners.
Just the next 8 years at 0.7% :-)
That's true if the price locked in will not drop.
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  #59  
Old 22.09.2022, 22:09
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Re: Ready for higher interest rates?

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I guess that idea went up in smoke?

*I’ll get my coat*
The typical pipe dream.
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  #60  
Old 23.09.2022, 10:29
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Re: Ready for higher interest rates?

Just remembered that car lease is at 0.6% rate.

What will happen to leases if interest rate goes higher? New car prices can't go down, so it's the sales that go down. Used car prices stay high.
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