The Swiss mortgage market is the most important credit market in Switzerland and of enormous importance for domestic banks. The balance sheet position "mortgages" accounts for 70% - 85% of the assets of the typical retail bank.
Today, the regulator only focuses on the less useful factors of "affordability" and "loan-to-value ratio".
Accordingly, the risk measurement of this position is central both to the financial health of the individual bank and to financial market stability. Switzerland has experienced very few mortgage defaults in the last 20 years.
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