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  #61  
Old 23.09.2022, 21:44
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Re: Ready for higher interest rates?

Buffet said there’s only three ways that a smart person can go broke…liquor, ladies, and leverage.

Demand outstrips supply they say so prices will stay high or grow forever. I remember very well the boom and bust from 2004-2007 in eastern Europe. There was a bidding war on every property. And when the market crashed in 2007 and i put the flat for sale i got one phone call the entire year.
It is all good until it isn't. Once people realize the prices for real estate start to go down it is all over. If you are leveraged to the max without cash reserves the last thing you want in to have to sell in such a market.

Last edited by Bibicu; 23.09.2022 at 23:31.
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  #62  
Old 24.09.2022, 20:58
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Re: Ready for higher interest rates?

According to this article, house prices have started to fall.

https://www.globalpropertyguide.com/...s-to-slow-4368

Is it all over?
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  #63  
Old 24.09.2022, 22:41
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Re: Ready for higher interest rates?

If it is true that the prices started to fall than banks will value the houses lower than the asking price. The more the price falls the bigger the gap between what the seller wants and what the bank says it is worth.

So over time less and less people will qualify for a loan.


Real estate market is a local market. Demand in Zurich is different than demand in Aargau.

Is it all over? I guess in Zurich area the party is still on but maybe in Olten or somewhere in the mountains there are already the first signs of cooling.
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  #64  
Old Yesterday, 08:28
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Re: Ready for higher interest rates?

The stats are from the SNB. I looked through the numbers. While it is true that average prices fell, it varies greatly by region, and property type. Family houses in lake geneva region were up by 4% for example.

Given the rapid rise over the last decade or so, I would consider a small decline a sideways movement... hopefully any decrease will stay muted like this.
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  #65  
Old Yesterday, 09:20
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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.
1.15% fixed until 2030.
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  #66  
Old Yesterday, 09:26
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Re: Ready for higher interest rates?

Well, it looks like we have made a successful bid on a house near Zürich, and will be signing the purchase contract shortly. (I never thought I would go into debt for THIS much money!)

With interest rate outlook quite 50/50, any tips on how to structure the mortgage?
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  #67  
Old Yesterday, 09:35
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Re: Ready for higher interest rates?

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Well, it looks like we have made a successful bid on a house near Zürich, and will be signing the purchase contract shortly. (I never thought I would go into debt for THIS much money!)

With interest rate outlook quite 50/50, any tips on how to structure the mortgage?
Congratulations! Personally with interest rates still relatively low, I'd go for certainty and have a single tranche with a long term fix. You can still get 12 year fix <3%. Sure, I might pay more if interest rates go down, but for the roof over my head, I'd prefer security/predictability.
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