Retail Mortgage Benchmarking in Switzerland
Selected summary results from a survey of 38 leading Swiss mortgage lenders
In recent years, Swiss mortgage lenders have been operating in a fast-changing market. As well as the above-average rise in property valuations since the COVID pandemic (+ 18 per cent from Q4 ‘19 to Q4 ‘23) and interest rates (SNB base rate from – 0.75 per cent in Q2 ‘22 to + 1.75 per cent in Q2 ’23 and ultimately + 1.25 per cent in Q1 ‘24), rapid progress with digitalisation and the emergence of platforms have changed the market and customer expectations in the housing ecosystem. In addition, the UBS/CS acquisition made waves in the Swiss financial centre.
Despite positive impacts on overall P&L due to the interest-rate differential in 2023, pressure on margins and competition for market share in the mortgage business are continuing to intensify. The ongoing fragmentation of value chains in the lending business, new regulatory expectations (e.g. in sustainability or risk management) as well as fundamental questions – particularly in connection with an infrastructure that is ageing in places – are set to exacerbate the situation. Furthermore, rising interest rates in recent months have led to a major shift towards shorter terms (as at January 2024, 74 per cent of the private mortgage volume had a residual term of one to five years compared with 69 per cent in 2022). A slight decrease in construction activity is expected in the short to medium term. Accordingly, the extension and takeover business, where customers are more willing to change, is set to gain in importance – a good combination of customer experience and a competitive price will prove crucial.
Consequently, mortgage lenders currently face multiple acute and long-term strategic questions in terms of their ability to meet the changing needs of customers as well as employees and shareholders in the future. In view of this, Deloitte provides in-depth transparency regarding the current situation as well as recommendations for Swiss financial institutions with this unique, objective benchmarking study.
Selected results of benchmarking respondents
Events in the market require a strategic realignment
Pressure on margins has led to a focus on short-term optimisations
A ‘digital first’ approach is also being increasingly applied to mortgage lending
Inflation and rising interest rates are squeezing house-hold budgets
About the survey
- Leading Swiss market players were surveyed directly in a data-gathering process up to Q4 2023
- Sample of 38 retail and universal banks, cantonal and regional banks, private banks and insurance firms
- Assessment of all Swiss market regions with a focus on owner-occupied housing
- Coverage of over 65 per cent of the Swiss mortgage volume (CHF 750 billion)
