Are banks less likely to grant mortgage loans?

Are banks less likely to grant mortgage loans?

Post-Covid mortgage financing

Why are certain lenders less inclined to grant mortgage loans?

To support the Swiss economy in the wake of lockdown measures linked to Covid-19, the Federal Council solicited the intervention of many banks to make more than 40 billion CHF available to businesses in the form of so-called “Covid” credit. The scale of the aid provided by banks is unprecedented. To provide some perspective, this sum represents approximately half of all mortgage loans granted every year in Switzerland.

While the Swiss Confederation acts as the guarantor for a large portion of Covid credit, banks participating in this intervention are limited in their ability to mobilize significant liquid assets in exchange. 

This situation has the advantage of allowing banks to reduce the impact of negative rates on their surplus liquid assets, deposited with the Swiss National Bank (SNB). The SNB’s negative rate policy encouraged lenders to massively grant mortgage loans before the health crisis to avoid suffering this financial burden. 

In view of this, financial institutions now show less appetite as far as mortgage loan requests are concerned despite certain a certain softening of the banking regulations practiced by the SNB. 

This new trend, however, should be qualified as not all the financial institutions active on the mortgage lending market have been affected to the same extent. Since insurance companies were not asked to participate and some banks granted fewer Covid-19 loans, they are more open to new mortgage financing applications. 

These particularities are not widely known to the public who often only contact their bank when purchasing housing. A smart prospective buyer can, therefore, take advantage by contacting a mortgage financing intermediary to give themselves every chance of success and find the best financing conditions on the market.

With a highly accurate view of daily developments in the mortgage financing sector, a financing advisor will be able to identify the institutions that are most likely to accept a funding request.

The information contained on this website is for information purposes only. This information can in no way be construed as a recommendation, invitation, or offer to conclude a contract, nor to purchase or sell real estate.

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This content is provided for information and discussion purposes only. It does not constitute a recommendation, invitation or offer to enter into a contract or to buy or sell real estate. All information, including facts, opinions or quotations, may be condensed or summarized and is expressed as of the date of writing. The information does not take into account the financial or tax situation and/or needs of any specific recipient. In the event of any discrepancy of interpretation between the French, German, English and/or Italian versions, only the French text shall prevail.