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  #21  
Old 20.06.2022, 11:24
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Re: SNB rises rates to -0.25%

Would be interesting to see the share of floating mortgages vs. the fixed rate ones.
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  #22  
Old 20.06.2022, 11:27
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Re: SNB rises rates to -0.25%

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The interest rate changes have only just started but have quite a substantial impact due to the extremely low starting point.

Someone paying 600 a month in interest under a 0.75% rate would pay 2'400 per month if it moved to 3%.
hopefully 2400 would be manageable. the worry is people who asked to pay 1200 per month at 0.75% they are looking at nearly 5k on a 3% interest rate.
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  #23  
Old 20.06.2022, 11:29
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Re: SNB rises rates to -0.25%

It's OK, salaries are going to rise in line with inflation, house prices are going to come down, storm in a teacup, nothing to see here
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  #24  
Old 20.06.2022, 11:35
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Re: SNB rises rates to -0.25%

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The interest rate changes have only just started but have quite a substantial impact due to the extremely low starting point.

Someone paying 600 a month in interest under a 0.75% rate would pay 2'400 per month if it moved to 3%.



Well well well, that's 4 times as much, whichever way you look at it
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  #25  
Old 20.06.2022, 11:38
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Re: SNB rises rates to -0.25%

Is this not the whole point of the affordability calculation being based on 5% interest rates (plus amortisation plus 1% maintenance). While the increase in rates is annoying when we are used to such low rates, unless you have had a material change of circumstances since the affordability calculation, this increase shouldn’t be causing you any sleepless nights yet.
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Old 20.06.2022, 11:44
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Re: SNB rises rates to -0.25%

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Is this not the whole point of the affordability calculation being based on 5% interest rates (plus amortisation plus 1% maintenance). While the increase in rates is annoying when we are used to such low rates, unless you have had a material change of circumstances since the affordability calculation, this increase shouldn’t be causing you any sleepless nights yet.
It's been mentioned a number of times what a joke the affordability calculation is. Circumstances change too, double income couples become single income parents etc.

Worst case is we see a sub prime crisis whereby many people have bought houses at very high prices due to low mortgage rates and now struggle to afford the repayments.

EDIT: As you say, some way to go before people need to get concerned. One wonders though if things were to get bad if the State would step in to allow a break from amortizing the loan and pay interest only just to give people breathing space and avoid defaults. Potentially 20%/600,000 people is quite a big problem, and not just for home owners!
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  #27  
Old 20.06.2022, 12:15
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Re: SNB rises rates to -0.25%

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Well well well, that's 4 times as much, whichever way you look at it
Hello, in terms of your ratio disposable income it is not the same at all. This is why I am saying that it is a different matter, not that it is logically the same calculation.
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  #28  
Old 20.06.2022, 12:31
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Re: SNB rises rates to -0.25%

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EDIT: As you say, some way to go before people need to get concerned. One wonders though if things were to get bad if the State would step in to allow a break from amortizing the loan and pay interest only just to give people breathing space and avoid defaults. Potentially 20%/600,000 people is quite a big problem, and not just for home owners!
Well, even the alarmist red-journalism Blick article (red is the new yellow) I shared mentioned that as long as people pay their mortgage on time, banks will look the other way and don't care if 60% of personal income goes to mortgage payments. During covid times, home and commercial renters had to pay rent or leave. It would be a great inconsistency in people with mortgages would be treated differently than business owners.

Ironically, one of the UDC/SVP ideas of reducing immigration was to use romantic environmentalism to stop the conversion of greenfields to apartment buildings. Higher interest rates might to the goal of a green Switzerland. Indeed, if the discussion of mortgage relief comes up I think I'll put a SVP sticker in my car and support Ueli Maurer when he says no to the relief program. Because, he'll say no

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  #29  
Old 20.06.2022, 12:34
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Re: SNB rises rates to -0.25%

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It's been mentioned a number of times what a joke the affordability calculation is. Circumstances change too, double income couples become single income parents etc.

Worst case is we see a sub prime crisis whereby many people have bought houses at very high prices due to low mortgage rates and now struggle to afford the repayments.

EDIT: As you say, some way to go before people need to get concerned. One wonders though if things were to get bad if the State would step in to allow a break from amortizing the loan and pay interest only just to give people breathing space and avoid defaults. Potentially 20%/600,000 people is quite a big problem, and not just for home owners!
It's also been criticised on the other side of the coin for being far too conservative and not allowing people to buy the home they want (which would have obviously pushed house prices even higher).

I think banks are likely to come to accommodation like you suggest before they are forced to by the government. Banks don't want to deal with defaulted loans, repossessions and re-sale.

It will be interesting to see how quickly the landlords pass on the increase to renters...
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  #30  
Old 20.06.2022, 12:41
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Re: SNB rises rates to -0.25%

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It's also been criticised on the other side of the coin for being far too conservative and not allowing people to buy the home they want (which would have obviously pushed house prices even higher).

I think banks are likely to come to accommodation like you suggest before they are forced to by the government. Banks don't want to deal with defaulted loans, repossessions and re-sale.

It will be interesting to see how quickly the landlords pass on the increase to renters...
Assume quicker than they were in decreasing the rents.
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  #31  
Old 20.06.2022, 13:13
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Re: SNB rises rates to -0.25%

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Hello, in terms of your ratio disposable income it is not the same at all. This is why I am saying that it is a different matter, not that it is logically the same calculation.

I'm sorry, i thought that was more than clear.
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  #32  
Old 21.06.2022, 03:43
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Re: SNB rises rates to -0.25%

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Swiss data must be skewed by the high foreign population. Low interest rate generally here means it shouldn't be a big issue, still surprised at the amount of people spending so much on housing though.
Capital gains don't get counted here, contrary to probably everywhere else.

So if you have a couple pensioners with significant wealth in securities but comparatively small pensions they merely use/need to finance there everyday expenses from, those +40% of what counts as income in CH may well be quite a bit less than 40% elsewhere.
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It's also been criticised on the other side of the coin for being far too conservative and not allowing people to buy the home they want (which would have obviously pushed house prices even higher).
Exactly. That would simply have raised the equilibrium. Good for current owners (at least on paper but the taxman would have liked it, too), but even worse for wannabe buyers than the status quo.
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  #33  
Old 21.06.2022, 04:28
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Re: SNB rises rates to -0.25%

There is still hopefully the option for many to clear the target mortgage of 35% ownership by liquidating pensions. I know this is far from ideal and lets say the nuclear option.

But if you can clear the target and switch to an interest only, no repayments and interest adjusted yearly, hopefully the storm can be weathered, if you only pay slightly above base interest rates and the NK costs.

There will be some that have just got the timing bad and wont do wonderful. I would suppose Switzerland does not want its currency to soar against the others so interest rates with luck will not go much higher
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  #34  
Old 21.06.2022, 09:17
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Re: SNB rises rates to -0.25%

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Capital gains don't get counted here, contrary to probably everywhere else.

So if you have a couple pensioners with significant wealth in securities but comparatively small pensions they merely use/need to finance there everyday expenses from, those +40% of what counts as income in CH may well be quite a bit less than 40% elsewhere.

Exactly. That would simply have raised the equilibrium. Good for current owners (at least on paper but the taxman would have liked it, too), but even worse for wannabe buyers than the status quo.
I know several pensioners with low pensions but very high wealth whose banks would not offer them a mortgage due to the way they calculate "affordability".
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  #35  
Old 21.06.2022, 10:19
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Re: SNB rises rates to -0.25%

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There is still hopefully the option for many to clear the target mortgage of 35% ownership by liquidating pensions. I know this is far from ideal and lets say the nuclear option.
Taking in account the rise of prices in the last two years - it'd be enough to ask the bank to re-evaluate the property price. In many cases it'll take the equity > 35%.
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  #36  
Old 21.06.2022, 10:38
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Re: SNB rises rates to -0.25%

"Inflation and interest rate hikes by the Swiss National Bank are driving up mortgage interest rates. The reference rates for Swiss fixed-rate mortgages have risen significantly since the beginning of the year, as the online comparison service Moneyland reported on Tuesday. Since July 2011, fixed-rate mortgages have not been as high.

Although the market had expected a tightening of monetary policy, it was surprising how quickly and how decisively the National Bank tightened the reins, explains Felix Oeschger, analyst at Moneyland, in the press release.

As of January 1, 2022, fixed-rate mortgages were 1.01 percent for five-year mortgages and 1.26 percent for 10-year mortgages, according to Moneyland's mortgage index. On June 20, 2022, five-year mortgage interest rates were trading at a significantly higher 2.57 percent and 10-year mortgage rates at 2.99 percent. This means that interest rates on five-year mortgages have risen by 1.56 percentage points since the beginning of the year, which corresponds to more than doubling. For ten-year mortgages, the increase is 1.73 percentage points – an increase of 137 percent."

https://www.nzz.ch/wirtschaft/wirtsc...ark-ld.1689326
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  #37  
Old 21.06.2022, 13:59
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Re: SNB rises rates to -0.25%

Well! Now banks can breathe somewhat and make more money.
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  #38  
Old 21.06.2022, 15:21
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Re: SNB rises rates to -0.25%

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Well! Now banks can breathe somewhat and make more money.
Make more money that's worth less... it's all relative

Rather they get rid of negative interest on savings and reduce their banking fees... but I am dreaming...
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  #39  
Old 21.06.2022, 16:51
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Re: SNB rises rates to -0.25%

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I know several pensioners with low pensions but very high wealth whose banks would not offer them a mortgage due to the way they calculate "affordability".
Isn't that confirmation?
Banks, like TC's map, don't consider capital gains as income.

Of course those refusals will reduce the number of no longer covered mortgages over time, but if you take out a 10yr at age 63 that'll take quite a while.
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Old 23.06.2022, 14:06
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Re: SNB rises rates to -0.25%

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It's also been criticised on the other side of the coin for being far too conservative and not allowing people to buy the home they want (which would have obviously pushed house prices even higher).

I think banks are likely to come to accommodation like you suggest before they are forced to by the government. Banks don't want to deal with defaulted loans, repossessions and re-sale.

It will be interesting to see how quickly the landlords pass on the increase to renters...
One assumes if the SNB acts on a regular basis raising rates as seems fairly likely at the moment, then after a short lag then rents would also start to go up. As soon as the reference rate rises then then landlords can give three months notice.

Ironically, the people who bought property during recent times where prices have gotten crazy are going to be least affected as they'll have locked in their mortgage during the times of low rates.

I still wonder though, a 1.8 million property, which with current prices won't get you very much close to a big city, even with a 250k income and 20% down payment should in theory fail a stress test. I doubt lenders however have been turning too many of such people away in recent years though.
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