Mortgage costs now more expensive than renting, says Credit Suisse
A new analysis by Credit Suisse has revealed that, for the first time in 13 years, the cost of renting a house or apartment in Switzerland is now cheaper than annual mortgage payments. The Swiss bank said that a sharp increase in the interest rate for mortgages has caused the phenomenon.
Rental costs now less than mortgage payments
According to the study, the cost of buying a house in Switzerland has increased dramatically in recent years. Credit Suisse found that while the average cost of renting a 4,5 room apartment in Switzerland is 22.440 Swiss francs a year, the annual cost of mortgage payments on the same property on a five-year 80-percent deal is 23.128 Swiss francs.
Credit Suisse found that homebuyers face a 3,1 percent surcharge compared to renters in 2022. This is a dramatic rise in the cost of buying a house as in 2021, average annual mortgage payments were 15,5 percent less than average rent.
Interest rate rises blamed for sky-high mortgage costs
This is the first time since 2009 that, on average, mortgages have cost more a year than renting. The study also did not take into account the cost of utilities and housing taxes, which can make buying a house even more unaffordable.
Credit Suisse blamed the heightened cost on mortgage interest rate increases, which rose from 1,1 percent in 2021 to 2 percent by the end of April 2022. Since the start of 2021, interest rates accounted for 45 percent of the average cost of a mortgage in Switzerland.
In concluding the report, Credit Suisse said that the price rises will hit new homeowners the hardest and will force many to postpone buying a house altogether. With the cost of energy and other goods and services also expected to rise, the prospect of owning a home in Switzerland seems further away than ever.