The economic world has been experiencing severe turbulence for some time. The Covid crisis, the supply chain that is still struggling, a war, soaring prices... How does this impact your credits?
The fight against inflation.
There are financial logics that are sometimes difficult to grasp; To the point that one can wonder about the effectiveness of certain measures.
One trend that is global, however, is that of raising interest rates to combat soaring prices.
The United States was the first to react. This was followed by other countries around the world and the European Union. Switzerland is also following suit.
The mechanics behind a rate hike?
The desire to reduce the easy access to liquidity that allows companies, as well as all of us, to invest in new projects, in infrastructure, in tools or software, in the latest smartphone...
The central idea is to reverse the balance between supply and demand, between sales and purchases, in order to mechanically force down prices and bring competition back into play.
Does it work?
In principle, yes. The real issue is the timing of the impact. Experts agree that the effects will not be immediate.
The result so far? A rise in prices and a rise in interest, all at the same time. If you add to this the effects of a context filled with macro-economic uncertainties and the energy crisis, it gives a painful result for the average person to bear.
Fortunately, in Switzerland, inflation is more moderate than in our neighbours, especially in France. Inflation is at 6% compared to half in Switzerland.
However, one variable that will impact our portfolio will be decisive, namely the cost of energy during the coming winter months.
Policy rates.
To better understand the issue of interest, it is the central banks of the countries that define the evolution of key rates. It is with this threshold in mind that financial institutions base their offers in terms of loans, credit facilities and mortgage loans.
Various rates exist, including the Saron, but recently, all key rates have been rising and the time for negative rates is definitely over.
The SNB states that it is "counteracting the inflationary pressure, which has increased again, and is hindering its spread to goods and services that have so far been less affected by inflation." "Without the tightening of the screws, inflation would rise further," she said.
The first victims.
When it comes to outstanding loans, especially those taken out a few years ago and soon to mature, the first victims are likely to be the owners. For the first time in a very long time, it is now estimated that owning a home costs more than renting.
The math is simple. If you're paying 1% interest on a million-dollar mortgage today, it's perfectly plausible that you'll have to pay triple that if you take out a new loan on a new term, even five years, in 2023.
From CHF 1,000 per month to be repaid, you will increase to CHF 3,000 per month. It hurts.
And your projects?
It all depends on the amounts involved and the type of project. Clearly, it's not the ideal time to take out a loan from your bank compared to two years or even a year ago.
As we are accustomed to recommending to our clients, an investment must be carefully considered. Your budget must be balanced and must take into account the costs incurred by borrowing. Term, interest rate, monthly payments and cash flow... Everything should be considered before signing your contract.
It is also essential to get advice from professional experts, people in the business who will take to heart to put together a healthy, complete credit file that respects your reality. This is especially useful for lower-income households that rely on credit to pay certain bills.
What about consumer credit?
If there is one financial sector that remains stable, it is the private credit sector.
The maximum rate is defined and cannot be increased without the prior agreement of the authorities concerned.
Competition continues to play its role as a regulator and this benefits people who still want to invest in a personal project or simply want to benefit from a breath of fresh air for their cash flow.
Useful because it is not linked to an approach that must be specified or justified, a consumer loan offers you the advantage of having funds that you can use as you see fit.
Useful because you are able to repay your loan in full when you decide to do so, without constraint.
Useful because you receive a quick response with clear, transparent and law-compliant information on consumer credit.
Milenia, by your side.
Based in Switzerland, with a network of recognized partner banks, active throughout the country, benefiting from a team of experts dedicated to the principle of quality and referent in quality surveys, Milenia will be able to support you in your efforts.
No administrative burdens, truly personalized support and a welcome anchored in attentive listening to your needs... These are the commitments made by Milenia, a major player in the credit sector.
That's not all.
Its financing platform allows you to simulate your credit by indicating the desired amount and the term. With just a few clicks, you have all the information you need and you can decide to be contacted by your personal advisor.
In conclusion, stay ahead as the coming months are likely to shake up your payment habits and the amount of some of your bills.
Remain cautious as it is important to avoid the context of over-indebtedness.
On the other hand, if the conditions allow it, live your desires to the fullest and carry out your projects in complete freedom!
By opting for a personal loan, your financing can be done quickly, confidentially and, above all, taking into account your budget and the healthy limits that any qualitative credit must respect.
The word crisis seems to be part of our everyday jargon, but your life is worth living to the fullest.
With this in mind, Milenia is at your side to support you in the realization of your projects!
