European Mortgage Market Update

Interest Rate Update: Eurozone and Switzerland

Eurozone: ECB Cuts Rates Amid Cooling Inflation and Trade Concerns

The European Central Bank (ECB) reduced its main deposit rate by 25 basis points to 2.00%, marking the eighth consecutive cut since June 2024. This decision reflects the ECB's assessment that inflation is now under control and signals rising concern over the eurozone's weakening economic outlook, exacerbated by U.S. trade tensions.

Market indicators, including Euribor swap rates, suggest expectations for further monetary easing, with projections of the deposit rate reaching 1.75% by year-end. This monetary policy trajectory has fostered a favourable lending environment across the eurozone, with countries like Spain now offering long-term fixed mortgage rates under 3%, benefiting borrowers amid the easing cycle.

Switzerland: SNB Poised for Further Cuts Amid Deflationary Pressures

The Swiss National Bank (SNB) maintained its policy rate at 0.25% during its March 2025 meeting, following a series of cuts aimed at countering low inflation and economic uncertainties. However, with consumer prices falling by 0.1% in May—the first annual decline since the COVID-19 pandemic—market expectations have shifted. There is now a 69% probability that the SNB will cut rates to 0% at its upcoming meeting on June 19, with a 31% chance of a return to negative interest rates.

SNB Chairman Martin Schlegel has indicated that the central bank is prepared to take rates below zero if necessary to prevent inflation from falling below its price stability target. Additionally, the SNB may intervene in foreign exchange markets to weaken the Swiss franc, although such actions carry the risk of being labeled a "currency manipulator" by the U.S. Treasury.

Swiss mortgage rates continue to be attractive, with 5-year fixed rates ranging between 1.30% and 1.45%, and 10-year fixed rates between 1.45% and 1.65%. Some lenders are also offering financing options for Swiss residents purchasing property in neighbouring countries, such as Italy, with loans in CHF up to 60% LTV without additional collateral requirements.

European Mortgage Market Rates and Indices

These rates are widely available for US- and UK-based buyers—typically at 70 per cent LTV. They are indicative only and remain subject to each client’s circumstances. Private-bank transactions usually require assets under management of 30–50 per cent of the loan amount. Traverse arranges purchase and refinancing deals in all of the above jurisdictions and has finance guides to each destination

Case study: Financing a tax nomad

The story opens

An international executive who spends time across a few jurisdictions was seeing finance for a recently constructed property in Marbella for €4 million. The client was still declaring his revenue to the tax authorities, though did not have to pay tax on the whole amount due to his non-resident status.

Traverse closes

We identified a lender willing to assess the client’s income in order to service the loan. We succeeded in arranging an 80% loan at €3.2M euros with €1M Euros under management initially pending the sale of another property. The loan was on a variable basis with a sub 1% margin making close to 3% for the first 12 months.