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Old 30.07.2021, 15:19
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Re: Investing - Buying small flat for renting?

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Well all mortgages were stress tested at 5% or more, so nothing to worry about except capital value falling substantially if they were to hit 5%, long fixes would likely be higher! A minority are home owners in CH, so little to worry about especially as they would be considered wealthy by the non home owners.
Have to agree here. I think what Amogles says holds true for the UK though. However, the Swiss rate is going nowhere until the ECB rate moves and that could be a long long time if they don‘t want to blow up the Latin and Greek economies.

Sadly those who wouldn‘t care if property crashes in CH because they don‘t own, probably don‘t realise that huge chunks of their pillar 2 are tied up in property as there are limits on how much equity the pension funds can hold and bond and cash yields are negative, so they have to look for returns somewhere.
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  #42  
Old 30.07.2021, 16:11
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Re: Investing - Buying small flat for renting?

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Sadly those who wouldn‘t care if property crashes in CH because they don‘t own, probably don‘t realise that huge chunks of their pillar 2 are tied up in property as there are limits on how much equity the pension funds can hold and bond and cash yields are negative, so they have to look for returns somewhere.
This is a problem with the anti-Capitalists in general. It's an easy yarn to spin that the mass of the money in the market belongs to the 1% or whatever. But it's not true.
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Old 31.07.2021, 14:15
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Re: Investing - Buying small flat for renting?

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On the contrary.

If I had a time machine I would use it to pick the right stocks. I could probably be doubling my money every 6 months or so.

Probably more if I borrowed all I could, even at rates of 6% and more I could be raking in the profits.

Then I would have much more money to burn and live the easy life.
Go back to february 10-15 last year and buy volatility calls, those with the biggest leverage would have given at least 100x in 5-6 weeks, and possibly even far more.
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Well all mortgages were stress tested at 5% or more, so nothing to worry about except capital value falling substantially if they were to hit 5%, long fixes would likely be higher! A minority are home owners in CH, so little to worry about especially as they would be considered wealthy by the non home owners.
I may be wrong with the absoluteness in this, but IIRC significant drops in real estate values (like, by 15% or more) always concide with a recession. Owners may still be able to service the debt while on RAV, but are unlikely to reduce the mortgage to balance that drop in value. Most buyers, after all, buy the most expensive they can afford.
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Old 31.07.2021, 14:29
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Re: Investing - Buying small flat for renting?

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I may be wrong with the absoluteness in this, but IIRC significant drops in real estate values (like, by 15% or more) always concide with a recession. Owners may still be able to service the debt while on RAV, but are unlikely to reduce the mortgage to balance that drop in value. Most buyers, after all, buy the most expensive they can afford.
Assuming most thrifty Swiss buyers did not increase their mortgage, in other words still hold as a maximum the debt they took on when buying the house, and that the house easily appreciates in value by 15% every 3 to 5 years, then only the most recent buyers need to be worried about house prices crashing by 15%. As Swiss home owners have a buy for life mentality in contrast to UK buyers who think in terms of a property ladder, this will probably affect only a very small percentage of home owners and an even smaller percentage of the population as a whole.
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