Switzerland, often seen as a bastion of economic stability in Europe, appears to be in a better position than its eurozone neighbors when it comes to the evolution of private lending rates. However, several factors suggest that private lending rates could still slightly increase these next few months. This article therefore focuses on a key element of this dynamic: the evolution of interest rates private loans in Switzerland by the end of the year.
- Signals to consider
- What to remember about these signals
- How to save on your loans?
- Our conclusion on the evolution of interest rates
3 signals to take into consideration for the evolution of private loan rates!
1. A strong labor market provides additional security on private loans
The labor market in Switzerland is in excellent health! Besides, we take advantage of one of lowest unemployment rate ever. This helps boost consumer confidence and support domestic demand, which in turn boosts economic growth. The positive signal from the labor market implies that lending institutions in Switzerland are confident. They should therefore theoretically maintain conditions for granting private loans similar to those of recent years. So, future applicants for private credit should not see their borrowing capacity decrease in the coming months.
2. Inflation under control in Switzerland which nevertheless impacts the rate of private loans
Inflation, often a key indicator of economic health, is much better controlled in Switzerland than in Europe. With an inflation rate forecast at 2.4% in 2023 against 5.5% in the euro zone, Switzerland benefits from a more stable environment. This is mainly due to the strength of the Swiss franc.
However, the inflation target is set at less than 2% by the SNB. This will therefore imply that one or two future increases in the key interest rate are not excluded between now and the end of 2023. Thus the rate of private loans would be directly impacted by these increases. For more information, you can consult the article " Effective increase in the maximum interest rate for private loans ". In this context, we therefore believe that the maximum rate on consumer loans could quite reach 12% by the end of 2023.
3. Switzerland maintains GDP growth
It is important to underline that, while the Eurozone has experienced two consecutive quarters of GDP contraction, Switzerland has maintained positive, albeit modest, growth. The outlook for 2023 also shows a Swiss GDP growth forecast slightly higher than that of the euro zone. This situation therefore generates positive signals in terms of the consumption of goods and services. In this context, one could also imagine that lending institutions in Switzerland should maintain the availability of funds similar to previous years for the granting of private loans. For future borrowers, this implies that sums of money available will also be similar to previous years!
What to remember from these three signals to predict the development of the private loan market in Switzerland
Switzerland's economic environment is currently marked by three key indicators: a solid labor market, better controlled inflation and positive GDP growth. These elements therefore strengthen the confidence of lending institutions in Switzerland. So, grant conditions private lending should remain similar to previous years.
However, even if Switzerland benefits from inflation that is better controlled than its European neighbour, exceeding the inflation target of the SNB suggests that key interest rate hikes are to be expected by the end of 2023. This could therefore lead to an increase in the maximum rate for consumer credit in Switzerland.
Despite this potentially limiting factor, the steady growth of Swiss GDP suggests a volume of private loans similar to previous years. future borrowers can therefore remain relatively confident about their borrowing capacity and the terms of future loans.
How to save on your consumer credit in Switzerland?
With the possible increase in the interest rate on private loans in Switzerland, consumers are looking for ways to save on their private loans. Here are some solutions that can help reduce costs:
Compare private loan offers:
The first step to saving on a private loan is to compare the different offers available on the market. Online platforms like comparator-credit.ch allow you to get an overview of the best current offers based on your profile.
Negotiate with lenders:
Never underestimate the power of negotiation! If you have a good record and a strong credit history, use it as leverage to get better loan terms. Lica perfectly masters this process and takes care of all exchanges with the various service providers on the market in Switzerland.
Use a specialized private credit broker:
A professional can help you find the best strategy for your loan. Lica's services go beyond the simple comparison of offers. The team of advisors can guide you towards personalized solutions for optimize your loan.
Repay your consumer credit more quickly:
If your financial situation permits, consider increasing your monthly repayments. By repaying your loan faster, you reduce the total amount of interest paid.
Consolidate your private loans with the buy-back solution:
If you have several credits in progress, consider a grouping or a redemption of your private credits. This will allow you to have a single interest rate that is often more advantageous and simplified management of your financing.
Pay attention to additional costs:
In addition to the interest rate, some loans include ancillary costs (application fees, borrower insurance, etc.). Carefully read the terms and terms and find out about these additional costs. Lica's services can help you identify and avoid these hidden charges.
Our conclusion on the evolution of private loan rates
The economic environment in Switzerland presents a mixed picture which will inevitably influence the private lending sector. Indeed, the robust labor market and continued GDP growth signal some stability and confidence. However, inflation slightly above the SNB's target suggests that interest rate hikes are expected in the next 12 months.
However, despite these prospects, solutions exist to maximize savings on private loans. In this context, the Lica platform emerges as an essential ally for consumers. By allowing an effective comparison of the different offers on the market, Lica gives borrowers the tools to make informed choices. With the support of dedicated advisors, Lica goes beyond simple contact, by offering tailor-made solutions for each borrower profile.
Do you have questions before applying for private credit? Our advisors are there to answer your questions 7 days a week directly on WhatsApp. Ask us for more information and we will be happy to answer you!