Central bank sounds warning about ‘vulnerable’ housing market
The Swiss National Bank (SNB) has repeated warnings that the house price bubble could burst with severe consequences for homeowners, banks and the economy.
This content was published on
2 minutes
swissinfo.ch/mga
Português
pt
Banco central alerta para mercado imobiliário vulnerável
“We consider the vulnerabilities on the mortgage and real estate markets to be at a high level at present,” SNB vice-chairman Fritz Zurbrügg said during a speech on Tuesday.
Property prices have risen around 80% in the last 15 years whilst mortgage debt has grown to 150% of gross domestic output (GDP). Real estate is 20% over-valued at present, according to the SNB.
Rock bottom interest rates have contributed to a housing boom in recent years. The SNB believes that up to 30% of newly granted mortgage loans would be at risk of default should rates rise to 3%.
“Banks would suffer substantial losses in the event of an abrupt and steep interest rate rise combined with declining real estate prices,” said ZurbrüggExternal link.
He warned banks not to lend to people who could not afford to service mortgage debt if interest rates rise.
But he stopped short of recommending a resumption of counter-cyclical buffers, which oblige banks to put aside capital to cover loan defaults. The 2% capital buffer requirement was suspended last year to help banks issue emergency loans to companies during the Covid-19 pandemic.
Despite its warning, the SNB is not predicting an imminent collapse of the housing market. It believes interest rates will remain low for the foreseeable future and is satisfied that the capital buffers built up by banks between 2013 and the start of 2020 are adequate for the time being.
Swiss rediscover communist zeal after 84-year hiatus
This content was published on
Over 300 participants founded the Revolutionary Communist Party (RKP) at its congress in Burgdorf in canton Bern at the weekend.
This content was published on
Nemo brought the Eurovision Song Contest to Switzerland with a victory on Saturday evening in Malmö, Sweden. It is Switzerland's third victory in the history of the music contest.
Switzerland abstains from vote on Palestinian bid for full UN membership
This content was published on
On Friday, Switzerland abstained from the vote at the General Assembly on granting the Palestinians new rights at the United Nations (UN).
Protein in abdominal fat could help shape obesity treatment
This content was published on
The study analysed fat cells from different locations in the body, and found that those in the abdomen have unique properties.
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.
Read more
More
Risk of housing bubble in Switzerland persists
This content was published on
A report by the leading Swiss bank UBS has found an increased risk of a real estate bubble forming in Switzerland’s housing market.
This content was published on
People in Switzerland have been looking for bigger or second homes during the coronavirus pandemic, fuelling housing shortages and pushing prices up.
This content was published on
Buying a house has long been out of reach for many Swiss but low interest rates and reasonable prices are changing the status quo, analysts say. Although Switzerland lags far behind other European countries in home-ownership rates, the proportion of owner-occupiers is increasing steadily. Between 1990 and 2000, the percentage of owner-occupiers increased from 30.3…
You can find an overview of ongoing debates with our journalists here . Please join us!
If you want to start a conversation about a topic raised in this article or want to report factual errors, email us at english@swissinfo.ch.