Significant risks in the real estate and mortgage markets 2023

As a result of rising interest rates, the everincreasing demand for real estate weakened, particularly in the case of private homes, and the growth rate for mortgages fell slightly. In the case of buy-to-let properties, a situation of historically low vacancies resulting from reduced construction activity and higher immigration placed strain on the rental marke.

The proportion of new variable-rate mortgages (SARON-linked) has doubled in the wake of the interest rate rises. Rising interest rates expose the affected borrowers to higher interest rate risks and the banks to higher default risks.

During 2023, a number of banks continued to overestimate the capacity of their borrowers to service their loans, or underwrote too many loans that did not meet their own lending criteria (exception to policy). This is not consistent with the self-regulation requirements introduced by the Swiss Bankers Association. Where corresponding irregularities were identified, FINMA deployed its supervisory instruments and ordered capital add-ons where.

(From the Annual Report 2023)