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In the year 2024, Switzerland's mortgage marketplace lending sector experienced a rebound, with total volumes of loans and bonds for public and near-public entities, mid-sized and large corporations reaching levels comparable to those of 2022, marking a year-over-year (YoY) increase of 6.2% to approximately CHF 14 billion [1].
Despite this growth, the broader mortgage market in Switzerland is facing subdued growth and cautious expansion prospects. The Swiss mortgage market expanded by only about 2.6% (CHF 32 billion) in 2024, which is below the long-term average growth of roughly 3% [1]. This slow growth can be attributed to rising costs, stricter regulations, and structural factors in the housing market.
Cantonal banks continue to dominate the mortgage market, securing around 75% of new lending, while prominent commercial players like UBS experienced volume declines [1]. Rising refinancing costs for banks coupled with a stricter regulatory environment have slowed mortgage issuance, despite a slight fall in interest rates for borrowers [1]. The net interest margin for banks decreased, indicating tighter profitability on mortgage lending [1].
Systemic risks remain, with the IMF highlighting issues like loosening mortgage standards, affordability challenges, and house price overvaluation, which could impact future lending practices [5].
The Swiss mortgage landscape is still predominantly dominated by traditional financial institutions, including cantonal banks, Raiffeisen banks, pension funds, large banks, and insurance companies offering fixed-term mortgages [1][2]. P2P and crowdlending platforms such as Swisspeers, Cashare, and Lend/Splendit exist but remain relatively niche, with crowdlending loans issued through these platforms contributing a small but stabilising segment of the broader lending market [3]. Newer P2P platforms like Maclear are emerging, offering attractive returns around 14%, mainly in personal lending rather than mortgage-specific marketplace lending [4].
Crowdlending and marketplace lending platforms show signs of stabilization after previous declines but remain small relative to traditional banking players [3]. Insurance companies represent an alternative but limited mortgage source due to constraints like requiring significant cash down payments rather than retirement fund usage, which limits market expansion [2].
The mortgage market's near-term growth outlook is cautious or even stagnant due to structural challenges. The abolition of the imputed rental value (a major tax-related housing subsidy) could lead to amortization of CHF 50 to 150 billion over the next five years, significantly slowing mortgage growth [1]. Rising costs and tighter regulations further burden growth potential.
The IMF flags the need to maintain systemic financial resilience amid risks like house price overvaluation and changing mortgage standards, implying regulatory caution impacting growth [5]. Future expansion may hinge on regulatory changes, market adaptations to rising costs, and potential broader acceptance of alternative lending platforms.
Elsewhere in the financial landscape, Cosmofunding, owned by Bank Vontobel, achieved a year-over-year (YoY) growth of 9.2% in 2024, with traded volume reaching CHF 11.9 billion. It focuses on public and corporate borrowers and has facilitated approximately CHF 46 billion in private placements, loans, and bonds since its launch [6]. Crowdlending, which includes consumer loans, business loans, and mortgage-backed loans, witnessed growth in 2024, with volumes rising 2% YoY to CHF 406.1 million [7].
As Switzerland navigates its mortgage marketplace lending sector, the strength of the Swiss franc is a key factor behind Switzerland's low-inflation environment. The Swiss franc tends to appreciate during periods of global market stress, pushing down the cost of imported goods and helping keep domestic inflation low [8].
References:
[1] Swiss Mortgage Market Report 2024, Swiss Mortgage Association [2] Swiss Banking Market Report 2024, Swiss Banking Association [3] Swiss Crowdlending Market Report 2024, Swiss Crowdfunding Association [4] Maclear Platform Overview, Maclear AG [5] IMF Country Report Switzerland 2024, International Monetary Fund [6] Cosmofunding Annual Report 2024, Cosmofunding AG [7] Swiss Crowdlending Market Report 2024, Swiss Crowdfunding Association [8] Swiss National Bank Monetary Policy Report 2024, Swiss National Bank
- In the Swiss financial landscape, Cosmofunding, owned by Bank Vontobel, experienced growth in investing, with a year-over-year increase of 9.2% in 2024, focusing on public and corporate borrowers.
- Despite the growth in Switzerland's mortgage marketplace lending sector, technology-based alternatives like crowdlending platforms remain small compared to traditional financial institutions, facing structural challenges that hinder further expansion in the business domain.
