Mortgage interest rates in Switzerland are as low as they have been for a long time. For example, ten-year fixed-rate mortgages are currently available with an average interest rate of 1.90 percent, as the mortgage index of the comparison service Moneyland shows. This means they are as low as they have been since March 2022. A downward trend can also be observed for mortgages with shorter terms. Business editor Sven Zaugg explains the background and what this means for those who want to buy their own home.
Sven Zaugg
Business Editor
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Sven Zaugg has been working as a business editor for Radio SRF since 2023. Previously, he worked as a reporter and business editor for “SonntagsBlick”.
Mortgage interest rates have been falling since June. What are the reasons?
Firstly, the Swiss National Bank (SNB) cut interest rates in June for the second time this year. Adjustments to the key interest rate generally affect mortgage interest rates. So if financial institutions such as the Raiffeisen or cantonal banks pay a very low interest rate to the SNB, they can also set lower interest rates for companies or individuals who take out mortgages or other loans. In addition, inflation rates have fallen – this is also pushing down mortgage interest rates. And there are other reasons too.
What other reasons are there?
Is this a good time to buy a home on the real estate market?
To do this, you first need sufficient capital. But it is clear that buying is definitely cheaper than renting at the moment. Fixed-rate mortgages have become cheaper by around half a percentage point in less than three months. However, the current figures have no impact for the time being on owners with fixed-rate mortgages. These mortgages are still running. Owners with fixed-rate mortgages must hope that the situation will be similar to today when their mortgages are renewed.
What do lower mortgage interest rates mean for tenants?
A distinction must be made here: asking rents, i.e. rents for new apartments, are becoming increasingly expensive. The situation will not ease any time soon, if at all. Existing rents could go down. The reason: the National Bank could lower the base interest rate again in September. Then the mortgage reference interest rate should also fall – and with it the rents.
However, this will not stop the continuous increase in rents. The long-term development of rental prices does not depend on the reference interest rate, but on new rents, high demand and, above all, the shortage of housing.
The SNB’s reaction to the economy will determine future developments. What are the signs?
There are certainly signs that the National Bank will lower interest rates again in September from the current 1.25 percent. This is assuming that inflationary pressure continues to ease. This would then also be a scenario for lower mortgage interest rates.
What about homeowners with Saron mortgages?
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Saron mortgages – also known as money market mortgages – are constantly adjusted to the base rate. At the moment, they are on average 2.09 percent more expensive than fixed-rate mortgages, as Moneyland writes. With the expected reduction in the SNB base rate, Saron mortgages should then be about as expensive as fixed-rate mortgages, provided that the interest rates for fixed-rate mortgages do not change in the meantime, Moneyland expects.
