Swiss banks have agreed to tighten lending conditions for investment properties following concerns by the Swiss Bankers Association (SBA), a self-regulatory body.
The SBA, which represents most of Switzerland’s banks, has issued new lending guidelines requiring lending deposits of at least 25% of the assessed value of the property for residential investment properties. In addition, minimum annual loan repayments must reduce loans by one third over the first 10 years.
The current rules require a deposit of 10% and a third of the loan be repaid over 15 years.
Despite existing lending restrictions, the amount of mortgage lending in Switzerland has continued to rise, recently reaching CHF 1 trillion.
Low interest rates have increased the attractiveness of investing in bricks and mortar as loans have become cheaper and alternative investments, such as bonds, less attractive. This has helped to push up the price of residential real estate.