Are Insurance coverage and Pension Funds Extra Profitable Than Banks for Mortgages? – Skilled Evaluation

With a market share of over 94%, banks dominate the mortgage mortgage market in Switzerland.

Solely a small a part of the market, which exceeds 1,200 billion francs, is financed by insurance coverage firms (about 37 billion) and pension funds (about 27 billion).

Nonetheless, the share of non-bank establishments is rising. MoneyPark at present has over 20 insurance coverage firms and pension funds as funding companions. Collectively they represented 45% of the quantity distributed within the first quarter of 2024. That is the very best share ever distributed by MoneyPark to insurance coverage firms (29%) and pension funds (16 %).

Extra profitable charges

In contrast to banks, mortgages are usually not a strategic a part of the enterprise mannequin of insurance coverage firms and pension funds. For them, it’s above all an funding instrument. Their policyholders’ pension funds have to be invested for the long run, with low danger, however with excessive return potential.

This explains why insurance coverage firms and pension funds have been forward of banks with regards to rates of interest for long-term fastened mortgages. And, for the time being, additionally it is the insurance coverage firms that usually supply the most affordable supply. Within the first quarter of 2024, the common rate of interest concluded by insurance coverage firms and pension funds in French-speaking Switzerland was round 20 foundation factors decrease than the speed of banks. The saving in comparison with the market common was even round half a p.c.

Subsequently, these two teams of suppliers don’t must refinance in the marketplace. They’re additionally not topic to the strict regulatory necessities imposed on banks for granting mortgage loans.

There are, nevertheless, a number of issues to notice and contemplate earlier than making the most of a mortgage by means of a pension or insurance coverage fund.

Typically they could have larger necessities by way of debt ratio and down fee. As well as, they’re extra possible than banks to reject credit score functions that deviate from specs and it typically occurs that insurance coverage firms and pension funds don’t make investments completely in mortgages.

Extra providers

When making their investments, they typically should take note of the maturity of mortgage obligations and directions on resettlement. With out capital for funding functions, such a service supplier could quickly withdraw from the market. As well as, most insurance coverage firms and a small variety of pension funds don’t supply Saron mortgages. Lastly, accessing insurance coverage firms and pension funds is tougher than going to your predominant financial institution.

Debtors are finest served after they converse to an impartial mortgage specialist who can supply them a variety of insurance coverage firms and pension funds.

On account of this capability to freely form their funding guidelines, pension funds are in a position to supply further customer-friendly providers. Let’s point out, for instance, the free exit if a sale is made.

Lukas Vogt, CEO of MoneyPark.

DR

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