Mortgage loans are crucial for household finance and retail banking. The Swiss mortgage
market has unique characteristics and is one of the largest in the world despite the low
homeownership rate. This study explores the equity composition of homeowners’ mortgages
in Switzerland, a subject covered by limited academic research. We aim to identify typical
homeowner profiles based on their distinctive equity contributions. Our data contain information on mortgage own equity, mortgage market, socio-demographic, and wealth factors
of 629 Swiss homeowners in 2022. We perform a k-means clustering algorithm to determine
the homeowners’ profiles and use multinomial logistic regression to study the effects of the
factors that determine these profiles. Our main findings reveal four typical profiles. The
largest group meets the minimum equity requirements mainly through cash and limited
recourse to pension savings. We show that theoretical affordability, purchase price, and
household income are relevant factors in determining the profile. Homeowners with higher equity contributions have lower incomes and buy more expensive homes. These findings can guide policymakers to identify and address potential pension gaps resulting from property
acquisition.
