The trend is towards longer-term mortgages
More and more buyers are turning to long-term mortgage loans to finance their property. Due to low interest rates, better comparison options and more providers on the market, these are more in demand than ever.
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The Swiss are increasingly tending towards longer-term mortgages. Ten years ago the five-year fixed-rate mortgage was the first choice, but now more and more people are opting for ten-year loan agreements to build or buy a property. This is the conclusion of the comparison and mediation service MoneyPark, according to a press release .
A total of 55 percent of the brokered mortgage volume was concluded for ten years in 2020. A further 24 percent of the brokered contracts have been fixed for an even longer term, reports the company based in Freienbach. The proportion of these long-term mortgage products has doubled since 2016. The interest rate averaged a “record low” 0.92 percent.
The reason for the trend towards longer terms are better options for comparing the products for external financing of a property. The market is also becoming more transparent and more competitive because professional intermediaries such as MoneyPark, in addition to banks, are giving new providers such as insurance companies and pension funds access. "In the past, banks preferred to sell shorter terms, also because, in relative terms, the 'risk-return ratio' is better than with longer terms", Stefan Heitmann, CEO and founder of MoneyPark, is quoted in the press release.
Furthermore, the current low interest rate environment favors the choice of a long-term fixed-rate mortgage, as the interest rate differences between the terms are small.
