Pension funds are putting banks under pressure
Mortgage borrowers were able to negotiate record-low interest rates in 2020. This was the result of an analysis by MoneyPark. According to her, pension funds and other alternative capital providers are undercutting traditional banks.
In the past year, mortgage holders reached new records for possible savings, writes MoneyPark in a press release . With this statement, the Zurich-based fintech relies on the analysis of fixed-rate mortgages concluded via its own platform. According to her, when taking out a ten-year mortgage, mortgage borrowers were able to save an average of 22 percent, or 26 basis points, compared to the benchmark rate of 1.17 percent. With a borrowing of 750,000 francs, this would save a total of 19,500 francs over the entire term, explains MoneyPark.
According to the fintech company, the high savings are related to the competition that alternative capital providers are making for traditional banks. Pension funds in particular are increasingly entering the mortgage business, writes MoneyPark. They offered an average of 46 basis points discount on ten-year mortgages last year. Insurance companies and banks were well behind with an average discount of 29 and 20 basis points, respectively, from the target rate.
Towards the end of the year, the competition has eased somewhat, is further explained in the announcement. "On the one hand, this can be explained by the fact that the providers no longer fought for every deal at the end of the year and, on the other hand, capital market rates rose, making alternative investments significantly better returns than they were at the beginning of 2020," said Stefan Heitmann, founder and CEO of MoneyPark, quoted there. "But we see clear signs that the competition among the providers will intensify again."