Mortgage Barometer for the third quarter of 2017 – mortgage rates stay low

Mortgage rates remain low in the third quarter. Source: iStock

Interest rates for fixed-rate mortgages barely moved again during the third quarter of this year. Surprisingly, despite rates remaining at an all-time low, demand for very short terms increased at the expense of medium terms. These were the results of the latest Mortgage Barometer provided by

Compared to the previous quarter, interest rates for 10-year fixes rose by 0.02 per cent, with benchmark rates lying at 1.47 per cent at the end of the third quarter. A similar lack of activity was seen among interest rates for 5-year and 2-year fixed-rate mortgages, which lay at 1.07 and 0.95 per cent respectively at the end of the quarter.


Demand for short terms on the rise

Long-term mortgages, traditionally the most popular in Switzerland, continue to be sought-after. At 79.4 per cent, their share of overall demand is exactly the same as the previous quarter. “Long-term mortgages lost some of their appeal in the first half of the year, with demand shifting towards short and medium terms accordingly. This trend has stopped for now,” adds Marc Parmentier, banking expert at Comparis.

Short-term mortgages accounted for a greater share of demand in the third quarter, which went up by 0.7 percentage points from 3.0 to 3.7 per cent. This increase occurred at the expense of medium-term mortgages. While demand for these mortgages rose significantly during the first half of the year, it fell in the third quarter from 17.6 to 16.9 per cent. “Borrowers in this country continue to value the ability to plan ahead with certainty, and so tend to go for longer mortgage terms in the main. The fact that demand for short-term mortgages has risen so much in the current low-rate climate is surprising,” says the expert. “It’s quite possible that borrowers are fixated with lower mortgage rates, and have deliberately chosen shorter terms with lower rates.”

European Central Bank committed to its plans

The gentle ebbing and flowing of mortgage rates that has prevailed since the beginning of the year may well come to an end in the foreseeable future. “The economic engine in the eurozone hasn’t been running this well in a long time, so it’s only a question of time until key interest rates go up,” says Parmentier. “However, some political uncertainties still remain – the tricky situation in Spain, for example – which could undermine the confidence of the markets in the stability of the eurozone.”

Nevertheless, nothing currently indicates that the European Central Bank (ECB) is likely to deviate from its plans to scale back its bond purchase programme. Only last week, ECB executive board member Sabine Lautenschläger stated that the time had come to slowly break away from this ultra-expansive monetary policy.