The dream of owning a home is still very popular among the Swiss population. However, realizing this dream is challenging and almost only possible via mortgages. The corresponding interest rate should be as low as possible. But people rarely compare offers. Instead, people rely on their house bank. This is shown by a representative survey conducted by Lucerne University of Applied Sciences and Arts.
The majority of the Swiss population live in rented accommodation. Less than half own their own home. Although the most important aspects of housing are (also) well met for most tenants, the desire for home ownership, and in particular for a single-family home, remains high. It symbolizes not only financial security, but also a long-term investment in the future. According to a representative survey conducted by Lucerne University of Applied Sciences and Arts (HSLU) as part of the annual IFZ Retail Banking Study, around 40 percent of all people would like to own a (new) property.
Generations Y and Z continue to dream of a detached house
There are two main groups: the "dreamers" and the "second-time buyers". Dreamers are looking for their first home and have to overcome the associated financial hurdles. They mainly include people from generations Y and Z. A good half of Dreamers are primarily looking for a detached house. Although the search for the ideal home is challenging due to rising prices and a limited supply, the desire to live in a home of one’s own remains deeply rooted in the collective consciousness of the Swiss population. "Second-time buyers" already own their own home and are looking for a new property that better meets their changing needs. Baby boomers are more strongly represented here.
Realization increasingly complex
A lack of equity and insufficient income are the biggest obstacles for the majority of Dreamers. In contrast, the challenges faced by second-time buyers are more property-related: 60 percent report difficulties in finding a suitable property, either because of an unfavorable location or simply because there are no suitable properties available. Only around a quarter report financial hurdles. "This indicates that current property owners are often reluctant to sell their properties. Not because they don’t want to sell, but because they can’t find a suitable follow-up solution," says Andreas Dietrich, head of the study.
Both groups are aware that the search and the financing are becoming increasingly complex, which leads to dampened expectations. More than half of home seekers see personal recommendations and chance as the best ways to fulfill their dream home.
Mortgage: Interest rates are important - but hardly anyone compares them
The survey also shows that almost 82% of Swiss homeowners still have a mortgage on their property and have not yet repaid it in full. For most respondents (86 percent), a low interest rate is an important factor when choosing a mortgage provider. However, many mortgage customers do not make comprehensive interest rate comparisons: For new financing, one in three only obtain a single offer. In the case of an extension, one in two. According to Andreas Dietrich, however, this has less to do with a lack of awareness. Rather, the willingness to switch is remarkably low: for 30 percent of customers, switching providers is out of the question, regardless of the interest rate difference. "In many cases, the house bank still enjoys great loyalty, especially if a change is associated with additional hurdles," says Andreas Dietrich.
One in three people invest sustainably
Since January 1, 2024, Swiss banks have had to determine their customers’ interest in sustainability when investing. According to another representative population survey conducted by HSLU, this so-called "ESG preference" is 43%. The proportion of sustainable investors in Switzerland currently stands at 34%. The study shows that personal attitude as well as perceived behavioral control (the belief that one’s own behavior can make a difference) and knowledge of sustainability issues are decisive factors in whether or not someone invests sustainably. However, it is striking that even people with a high level of interest in sustainability are not very familiar with key concepts such as "ESG" and "SDG".
The studies also show that banks could significantly increase the proportion of sustainable investors if they only offered customers sustainable investment proposals (with the option to opt out). This would increase the proportion of people who invest sustainably to some extent by five percentage points. The proportion of people who invest exclusively sustainably would even be 15 percentage points higher. The financial sector can therefore play a significant role in the implementation of sustainability goals.
Retail banks: rising interest margins, higher profits and improved efficiency
This year, HSLU once again examined the balance sheets and income statements of all Swiss retail banks. Based on nine key figures, the study shows which is the "best" retail bank from a financial perspective (see tables in the appendix). Overall, the financial condition of the Swiss retail banks is very good. In particular, the rise in interest rates had a very positive impact on the financial statements as at the end of 2023. The interest margin rose from 1.15 to 1.31 percent, making up for an eight-year decline in one year. Profitability (return on assets) increased by 9 basis points to 0.49% and the cost/income ratio, which compares operating expenses with operating income, fell by 4.72 percentage points to 52.82%.
IFZ Retail Banking Study 2024
Since 2012, the Institute of Financial Services Zug IFZ at Lucerne University of Applied Sciences and Arts has been examining the core business of domestically focused banks every year. The 260-page "IFZ Retail Banking Study 2024" can be ordered at ifz@hslu.ch for CHF 290. Further information at: hslu.ch/retailbanking
