Slow down further interest rate hikes mortgage loans put banksfreeze time for interest rates on the date when According to reportswill be March 31st. This means that any interest rate hikes made after March 31 or due from now on will not apply. “Freeze” refers to current mortgage loans with a floating interest rate and a basic base or euroboron 1 month or 3-month euroboron either the base rate of the ECB or the libor rate, on the basis of which the mortgage installment in Swiss currency is calculated.

The goal is to stabilize loan payments at current levels, ie without the further burden of new interest rate hikes that are expected to occur in the near future.

Since the reference date is March 31, the 3-month Euribor will stabilize at around 3.030%, and since the loan is pegged to the ECB interest rate, it will stabilize at 3.50%. For each interest rate, each bank will calculate the margin (spread) agreed with the borrower and thus the loan payment will be calculated.

According to bank sources, this measure effectively makes all mortgage interest rates fixed for a certain period, which according to information will be 12 months.

In this way, they seek to reward regular borrowers, that is, those who do not delay payment on the loan. In total, mortgage loans that are in the portfolios of banks, i.e. not sold to funds amount to 24.5 billion euros, but given that some of them remain in the red, and some are already at a fixed interest rate, it is estimated that it will cover about 20 billion euros. It is specified that if interest rates deescalate in the near future, the reduction will be applied in favor of the client.

The cost of this measure will fall on the shoulders of banks and is estimated to be around 100 million euros if the upcoming interest rate hike is limited to about half a unit, and inflation is not quelled and the ECB continues to increase it. for half a unit, the cost will be more.

This also applies to current mortgages in Swiss currency.

It should be noted that, according to estimates, ECB two more interest rate hikes totaling 50 basis points are expected in the near future. By the end of the year, the 3-month euribor is estimated to rise to 3.60%, and if the estimates of two more ECB rate hikes (0.25 each) are confirmed, the key rate of the Central Bank will be set at 4% in the coming months.

This means that for a loan, for example. 100,000 euros with a final interest rate of 6.5% (i.e. spread 2.5% + 4%) and a maturity of 20 years, the installment will increase by 217 euros per month, and if the final interest rate is kept at 6 % (spread 2.5% + base interest rate 3.5%), the increase in the installment will be kept at 188 euros and therefore the benefit will be 29 euros per month or 348 euros per year on the same loan. The benefit can be maximized depending on whether the loan amount is larger or the repayment period is longer, while the benefit will be lower for someone who has repaid the majority of their loan.

dose subsidy

The measure follows a 30% expansion of the criteria for vulnerable households set by the Ministry of Finance in cooperation with banks to protect the first home, which provides for a retroactive subsidy from last July of a 50% increase in the payment due. to rising interest rates. After expanding the criteria to only apply to those with certain income and property criteria such that they are considered vulnerable, the measure is estimated to cover 45,000 borrowers who have a mortgage on their first home. After the expansion, income criteria increase to €27,300 depending on household composition from the current €21,000, and asset criteria increase to €234,000 depending on household composition from the current €180,000.