The debt is not that threatening
At second glance, the high level of Swiss debt is not quite so dramatic: several factors mitigate the risk. The Swiss also have high assets and incomes, so mortgage interest rates are not a massive burden on household budgets. In addition, Swiss homebuyers shy away from risk and mostly take out long-term loans at fixed interest rates.
Such fixed-rate mortgages – like money market mortgages with fluctuating interest rates – are still available very cheaply. These low rates are likely to remain in place for a while: after all, the key interest rate of the Swiss National Bank is still negative. In other words, the SNB would have to raise interest rates quickly and sharply for the interest burden to become a problem for some homeowners.
Also important: Banks are very reluctant to grant mortgages – customers must bring enough (20 percent) of their own funds and be able to bear an artificially high interest rate of 4.5 to 5 percent.
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