The end of a golden era ?

It has to be said that for Switzerland – not having seen such levels for 4 years – the shock is rather a harsh one. We had almost gotten accustomed to low rates; the psychological 1% mark is still hard to digest. And while the signs seem unfavorable, we must not give in to panic.

This sharp uptick is above all due to the US Federal Reserve’s announcement to raise its key rates several times during 2022 in an effort to curb the inflation currently hitting the United States. On this side of the Atlantic, though, we’re not seeing anything like it – neither the European Central Bank nor the SNB seem willing to follow suit. It has to be said that by comparison, the increase in prices remains relatively low in our country. Analysts are therefore not overly alarmed and expect a limited increase in the cost of credit in Europe, and even more so in Switzerland.

The SNB is watching grain

There are also other reasons to hope that our Central Bank is refusing to raise interest rates. First, this measure would cause a rise in the (already high) square meterage price given the higher construction costs leading to supply scarcity. This would then cause rents to go up, in turn making Swiss households lose purchasing power. These are all reasons why the Swiss National Bank should not follow the American example. Lastly, another source of hope comes from the reason for the slight inflation we are experiencing; indeed, it is primarily due to the economy’s strong post-pandemic recovery and should therefore slow in the coming months. It is consequently a safe bet that this uptrend in mortgage rates will not continue.