Some areas, “signs of overvaluation remain”, says SNB, without specifying
ZURICH, SWITZERLAND – Swiss residential mortgage and real estate market “momentum” remains exceptionally strong, the Swiss National Bank said Monday 27 August, but in the second quarter of 2012 “there were some indications of a possible slowdown of this momentum”. As a result, the central bank will not activate counter-cyclical capital buffer rules, designed to cool an overheated market.
The SNB notes that stricter capital requirements for mortgages and revised bank self-regulation rules for mortgage lending were announced in June. “Both measures are intended to have a dampening effect on real estate prices and mortgage market momentum. Given these factors, the SNB has decided not to issue an official proposal to the Federal Council to activate the counter-cyclical capital buffer at present.”
The bank urges caution, however, saying the decision “should not be interpreted as an all-clear. Interest rates are still exceptionally low and there are signs of high risk appetite in mortgage lending. As a consequence, the risk of a further build-up of imbalances and the associated risks to financial stability remain high.”
It is now unlikely that such a decision, if made, would be announced before 2013.