investments, as shown in chart 8a, which compares yields on ten - year confederation bonds with those on investments in residential real estate. 5 this yield difference could cause demand to stay high for the near future, thereby pushing prices up even further. although the borrowing component in investment property financing tends to be lower than in owner - occupied real estate, domestically focused banks are exposed to this segment. one - third of new mortgages are issued for residential investment property, yet the affordability risk for such property owned by private individuals is roughly as high as for owner - occupied real estate. moreover, a correction in this segment can affect other real estate market segments, via changes in market confidence and expectations ( spillover effects ). so we need to keep a close watch on the residential investment property segment. a second risk arises due to falling liability margins in an environment of low interest rates. to offset these, a bank essentially has two options – apart from increasing its lending interest rate. both options are associated with higher interest rate risk, which in turn increases the risks to financial stability. first, it can grant a higher proportion of long - term loans at higher interest rates, as they generate higher interest revenue than short - term loans. however, this also increases the so - called maturity mismatch. 6 the greater the maturity mismatch, the higher the interest rate risk, and thus the potential economic losses for the bank in the event of a sudden interest rate rise. this is because the larger the maturity mismatch, the quicker the rise in refinancing costs compared to long - term fixed interest income when interest rates go up. second, a bank which has hitherto hedged against interest rate risk might be tempted to dispense with such hedging, and the associated costs. chart 8b shows that interest rate risk has indeed risen in periods of low interest rates or, as happened between 2009 and 2014, has remained at high levels. at the current margin, we are seeing first signs that risk has once again increased slightly since the introduction of negative interest. a third potential risk to financial stability arises from the fact that, in the prevailing interest rate environment, non - banks such as insurance companies and pension funds in search of yield also find the prospect of granting mortgage loans attractive. even though currently only a relatively small portion of mortgages is granted by non - banks, it is doubtful whether the banks will be able to maintain the current elevated asset margin on new mortgage loans

date. for 2013, we expect growth of 1. 0 – 1. 5 %. while the gradual revival in the global economy is having a supportive effect, the strength of the swiss franc will hold back export momentum and corporate investment expenditure. domestic demand is also likely to be restrained over the next few quarters. in view of the modest pace of growth, production capacity in switzerland will probably remain underutilised in 2013. the rate of unemployment is likely to rise further. given the fragility of global conditions, the downside risks also remain high for switzerland. monetary and financial conditions i will now turn to monetary and financial conditions, which are almost unchanged as compared to the situation in summer 2012. interest rates in the swiss franc money market continue to fluctuate around zero. since mid - june, the three - month libor has fallen from some 9 basis points to only 1 basis point. interest rates in the repo market are predominantly negative. in addition, the yield on ten - year confederation bonds attained a new historical low. this shows that the demand for safe investments remains high. over the past few months, as before, movements in the swiss franc mainly reflected the changing risk assessment of market participants. following the ecb ’ s announcement in early september that it would purchase unlimited quantities of bonds of crisis - hit euro area countries under certain conditions, the upward pressure on the swiss franc lessened. the m1, m2 and m3 monetary aggregates, which measure the amount of money held by households and companies, have increased substantially over the past few months. for this reason, some fear that we are heading for high rates of inflation. however, this is not the case. the inflation forecast for switzerland continues to be low. at present, the inflation rate is still in negative territory. inflationary pressure remains minimal because of the strong swiss franc and the relatively unfavourable global growth outlook. moreover, the underutilisation of production capacities in switzerland is restraining the inflation outlook. surveys on inflation expectations show that households and companies continue to assume that prices will remain stable, also in the medium term. given the current low interest environment worldwide, enforcement of the minimum exchange rate is necessary to ensure suitable monetary conditions in switzerland. global uncertainty will persist for the foreseeable future and drive demand for secure investments. bis central bankers ’ speeches as a result the exchange rate situation will remain fragile, despite the calmer environment that has come about as a result of the