Swiss National Bank Revoke the Cap on the Euro Exchange Rate
Swiss National Bank wreaked havoc on the financial markets yesterday
Property News Flash from Andy Symington at Mountain Base: The Swiss National Bank (SNB) rocked the financial markets yesterday morning by declaring they have pulled the plug on their minimum exchange rate against the euro (1.20) with immediate effect, a move which came completely out of left field.
The news led to a huge euro sell and caused chaos in the FX market, with the Swiss Franc gaining around 35% against the euro in a matter of minutes. With everyone dumping their euros the pound was able to take advantage, with GBP/EUR rates climbing to €1.3097 at the mid-market, the highest we have seen the currency pair since March 2008.
This is great news for the property market as the prices have, in effect, suddenly become 20% cheaper for the Swiss. They constitute a healthy proportion of the active buyers at present, but we expect to see this activity rise markedly in the coming months. It was a similar rate shift a few years ago that stimulated the local property market after the financial crisis hit in 2008. Buyers are looking for a place for the weekend or a home from which to make the journey to Geneva for work.
The effect on the local population is twofold. For those who commute to Geneva to work are very happy indeed, seeing an immediate 20% rise in their pay packet. The news isn't so good for those with Swiss mortgages, who have not only seen their outstanding loans rise by 20% in a day, but their monthly repayments will have risen as well.
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Mountain Base have recently formed an association with Knight Frank and are part of their Alpine Network, working closely with their offices in Geneva.
