Construction, Banking, Boom: How Mortgages Boost the Local Economy

On construction sites, people usually address each other informally. Everyone knows each other—the carpenter and the electrician, the plumber and the floor installer. Many are from the region and often work on the same construction project.

Like almost no other industry, the construction sector is shaped by local and regional SMEs. As a result, a large portion of the invested funds remains with the local businesses and their employees.

This means that when banks finance residential construction and renovations through mortgages, they trigger an economic chain reaction in the communities. This makes them key drivers of local value creation.

In numbers: Construction investments account for around 10 percent of Switzerland’s gross domestic product and support approximately 330,000 jobs, or 6 percent of all Swiss jobs. Thus, behind every mortgage there is construction volume, jobs, and wages.

A Stable Foundation for the Banking Business

For banks, the mortgage business is a key pillar. The mortgage portfolio has exceeded the 1 trillion franc mark since 2017 and rose to 1.271 trillion by the end of 2024. About three-quarters of this is attributable to owner-occupied residential property.

It is precisely this segment that is driving new business: in the fourth quarter of 2025, the volume for owner-occupied homes amounted to over 11 billion francs. An average of 630,000 francs was financed per property. These mortgages are usually accompanied by contributions from the homeowners themselves, as well as additional investments in energy-efficient renovations or modernizations.

The size and long-term stability of this market offer banks a high degree of predictability. This allows them to extend loans to households and businesses even during economically challenging times.

Proximity to the Region as a Success Factor

The leverage effect is particularly evident at regionally based banks. They are familiar with local conditions, demand in the communities, and the situation of local businesses.

This proximity allows for a nuanced assessment of projects—from the construction of a new apartment building to Minergie renovations and the repurposing of commercial properties. When such projects are financed in a sustainable manner, it not only improves housing and reduces vacancies but also enhances the quality of the location, increases tax revenue, and boosts the attractiveness of the economic region.

In this way, mortgages become a driver of regional prosperity. They link dreams of home ownership with local economic development.

Responsibility for sustainable development

For banks, this represents both a responsibility and an opportunity: through careful credit assessment and sustainable financing solutions, they make a decisive contribution to ensuring that construction projects create lasting value for entire regions.