Due to the environment of very low interest rates and the decline in construction activity, a rapid normalization of the market is expected. In the mortgage sector, the LIBOR reference rate will be replaced by SARON by the end of 2021. Furthermore, new trends and digital transformations will impact the residential construction market, presenting new opportunities, both for those active in the construction sector and for potential buyers.
From your privileged observatory, how do you see the development of the Swiss real estate market in 2020?
“After a very promising start to the year, the coronavirus lockdown has stalled the home ownership market. As reduced work and unemployment increased, the people concerned have postponed the purchase of residential property. This market paralysis was only temporary and with the first easing from mid-April came the turnaround. Thanks to very low interest rates and low annual costs of home ownership, the latter continues to be attractive. The residential market is expected to return to normal quickly, also as the lockdown has demonstrated the importance of having your own home and revived demand. This should also motivate many tenants to persist in their goal of buying their own homes. Sellers, real estate agents, authorities and banks quickly adapted their processes to the new circumstances. Although the home ownership market is already recovering, it will continue to be affected by the pandemic in the coming months. Barring a second lockdown, we expect broad normalization and a complete return to pre-crisis demand levels over the next year. For a complete picture of the situation, I recommend reading the Real Estate Monitor and the Real Estate Study, published by Credit Suisse on a quarterly and annual basis, respectively ».
How did you manage the mortgage operations during the exceptional situation we experienced in the spring?
«Our mortgage assistance is based on expert advice in line with the client's needs. What is most important to us is not taking out a mortgage as an end in itself, but cultivating a long-term relationship. In Ticino, we have about fifteen mortgage specialists able to offer our clients customized financing solutions. To guarantee this type of service even during the lockdown, we have changed the way we offer our services and products. As physical meetings with customers were not feasible, we took advantage of new communication systems, including online banking applications that allow our specialists to share information and presentations with customers in a secure manner. Furthermore, we are progressively developing new digital solutions to make our services more flexible and easily accessible. For example, from the beginning of July it is possible to extend the mortgage quickly and without complications via Online Banking in just 2 minutes ».
What services do you offer for clients with sophisticated mortgage needs?
"Access to credit for prestigious properties is a matter of trust. We ensure complete and expert assistance in the field of loans and mortgages also for this type of clientele. For experienced investors, we have consultants specializing in structured loans and Lombard loans who can advise clients on flexible alternatives to mortgage credit financing in line with their needs and risk profile. With structured loans and Lombard loans we offer various advantages to our clients, including obtaining liquidity, financing investments without selling existing assets, monetizing strategic equity positions and generally optimizing the performance of the investment portfolio ».
We will soon see a major shift: the transition from the benchmark LIBOR to SARON. What changes for the bank client?
«By the end of 2021 the best known short-term interest rate, LIBOR (London Interbank Offered Rate), will be replaced in Switzerland with the new SARON (Swiss Average Rate Overnight) reference rate. Credit Suisse has already launched a wide range of fixed-term SARON mortgages as well as a SARON rollover mortgage, which will replace Swiss franc LIBOR-based mortgages by the end of 2021. Credit Suisse thus guarantees its customers a smooth transition to the new reference rate well in advance. In our Online Banking, the customer has a detailed overview of his mortgages, receives notices of an upcoming extension and has the option of directly executing an extension in just six clicks, at any time and place, quickly and easily ».
In your opinion, what are the digital transformations and trends that will change the housing market?
“Our experts have identified several trends that, driven by technological innovations and digital transformations, will revolutionize residential construction. First, sustainable construction is set to shape the homes of the future. In addition to the use of environmentally friendly materials, good recyclability and a long service life, energy efficiency will be decisive. In so-called smart homes, household appliances are connected and communicate with each other. This turns out to be extremely energy efficient, for example by dimming the lights according to daylight and weather conditions. The aging of the population also has repercussions on buildings: a flexible floor plan able to adapt to the changing needs of residents brings significant advantages. For example, a two-story family home for a couple with children could be converted into a two-family home in old age, generating rental income that would compensate for lower income after retirement. Another trend concerns the so-called co-housing. These are community settlements of houses and apartments that function like small towns. The heart of the settlement are the large collective spaces and common areas that are managed and used together by the residents. In addition to kindergartens, laboratories and libraries, co-working spaces invite to shared work and common gardens to socialization. In addition, compact architecture and innovative floor plans for confined spaces make their way in response to an increasingly scarce building surface. A house in mini format offers, on an area from 15 to 45 square meters, everything you need to live. Finally, 3D technology will also revolutionize construction. Thanks to the computerized printing process, production becomes fast and economical.
Our mortgage specialists work side by side with client advisors to find the best solution capable of satisfying every need of our clients ».
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