«The rate cuts threaten to stall,» headlines the comparison portal Comparis on Thursday in its latest survey of the Swiss mortgage market.

Despite the Swiss National Bank (SNB) rate cut in March, ten-year fixed-rate mortgages have slightly increased in price since the beginning of the year. The indicative rates for ten-year terms are currently at 2,35 percent, compared to 2,26 percent at the beginning of the year. The 10-year swap rate and the yield on 10-year federal bonds have increased by 0,12 and 0,20 percentage points respectively during this period, the report continues.

«The slight increases compared to the beginning of the year indicate that the initial expectations for rapid rate cuts are no longer seen as optimistically as they were six months ago,» writes Comparis financial expert Dirk Renkert.

Sideways Movement Expected

For the remainder of the year, a sideways movement is expected for medium- and long-term fixed-rate mortgages. By the end of the year, a range of 2,05 to 2,40 percent is expected for ten-year rates, 2,00 to 2,35 percent for five-year rates, and 2,25 to 2,60 percent for 15-year rates.

A change in the reference rate, currently at 1,75 percent, is not expected. The SNB’s rate cut has slowed the upward trend in the development of average mortgage rates, the report continues.

«With the rate step in March, it is not expected that the reference rate will increase significantly by the end of the year, and renewed rent increase demands will not be due,» commented Renkert.

ECB Moves and Fed Stays Put

The ECB lowered the key interest rates by 25 basis points to 4,25 percent last week. This was the first cut in almost five years.

The Federal Open Market Committee of the US Federal Reserve, as expected, did not make a cut on Wednesday and left the range at 5,25 to 5,5 percent. Moreover, the monetary policymakers now only foresee one more rate cut this year, instead of the previously expected three.

For the Swiss National Bank (SNB), the arguments for further rate cuts have thus lost weight. The SNB will decide on its interest rate policy next Thursday, June 20, with the «Monetary Policy Assessment.»