Wealth and debt often go hand in hand. The chart shows Swiss household debt at 128% of GDP as of March 2023 (Source: K-Geld 06/2023), mostly driven by mortgage loans.
Do you think this trend will continue ? What would happen in the event of a financial crisis? Any thoughts ?
WhayAny thoughts?
by RhinoInsight
5 comments
This is probably due to mortgages for houses.
In Switzerland due to tax reasons it’s an advantage to never fully pay back the mortgage.
This is normal in fiat money system, to have any assets at all, someone needs to have debts in order to balance those assets, this is just simple accounting
Not true for everyone.
Wife and I are living perfectly.
Right by the ski lifts. With a sweet and stylin house.
Normal jobs. See you on the slopes.
In the text it says it is due to mortgages and that the debt are an average of CHF 112’950 per capita. This means the big risk is the housing market and a burst of the ever increasing price bubble.
Think for yourself which events could burst it like a needle stuck into a balloon.
There’s a rather simple reason for that.
In Switzerland you can subtract the mortgage interests from your income before tax.
Also, in Switzerland there is a “Eigenmietwert” added to your income, based on what rent your property would earn on the free markes, minus a few things (insurance, upkeep, and stuff like that).
So if you have the means, you aim to make your mortgage to generate interest in the same amount of the Eigenmietwert.