Swiss homeowners stick with mortgage providers

Most property owners in Switzerland say they plan to stay with the same financial institution when it comes to mortgage renewals, an intention that is not shaken by the growing global economic crisis, a survey shows. But the poll, conducted for consumer rating agency Comparis, indicates that a higher percentage of customers of the troubled UBS and Credit Suisse banks are ready to switch. Despite the shaky financial times, most Swiss homeowners prefer to stick to the tried and true rather switch when it comes to mortgages. A study released by Comparis, the consumer rating agency, finds that when the time comes to renegotiate mortgages 70 percent of customers say they would stay with the same financial institution rather than seek out a better deal from another bank.
 
The only exception to the rule is customers at UBS and Credit Suisse, the country’s two largest high street banks.
 
Only half of those with mortgages from UBS, Switzerland’s biggest bank, say they would stay with the institution, rather than look elsewhere when the time arrives to renew the property loan, Comparis said. Its conclusions are based on a survey by polling firm Link of 633 people who have borrowed money for real estate in French- and German-speaking parts of the country.
As part of the survey, people with mortgages were asked if they believe the current economic crisis presents related risks, and whether they would change financial institution for their next mortage. The results showed that property owners generally continue to have great confidence in Swiss banks, at least with regard to loans for property. Only 13 percent of those surveyed said they would change financial institutions for their next mortgage contract.
 
Comparis said 59 percent of clients with Credit Suisse would switch to another mortgage provider. Both UBS and Credit Suisse have suffered major losses in the past year and have seen clients transfer billions of francs in deposits to other institutions.
The main beneficiaries have been cantonal banks and co-operative institutions such as Raiffeisen.  And clients of these alternative banks seem to have greater confidence in their mortgage services. For example, 76 percent of clients with Raiffeisen said they would not change financial institutions for a new mortgage contract.
Comparis maintains, however, that most Swiss surprisingly have blinkers on with regard to the risks that the economic crisis my pose to mortgage providers. A large majority of those interviewed – 83 percent – said they saw no danger from the financial crisis with regard to their loans.
 
“Clearly, numerous Swiss are unable to imagine that a bank could go bankrupt in their country,” said Martin Scherrer, a bank expert for Comparis. When asked what would happen if their bank went under, almost one in five responded that they simply did not believe this would occur.
Comparis warns, however, that a bank’s financial difficulties can lead to changes in mortgage contracts, something that customers should be aware of in times of unprecedented financial change.