Mortgage interest rates in Switzerland: historic decline delights buyers!

Mortgage interest rates in Switzerland: historic decline delights buyers!

Mortgage interest rates in Switzerland experienced a significant decline in the second quarter of 2023. This development is directly due to the reduction of the key interest rate by the Swiss National Bank (SNB), which was reduced from 0.25% to 0% in June 2023. This measure resulted in Saron mortgages now costing between 0.9% and 1.2% on average. Despite a slightly negative market value, the contractually applicable Saron benchmark interest rate remains at 0% reports Finance and Economics.

Fixed-rate mortgages have also become cheaper. In detail, 10-year fixed-rate mortgages now cost on average between 1.4% and 1.9%, while 5-year fixed-rate mortgages are offered in a range of 1.0% to 1.5%. In the first quarter of 2023, rates for 10-year fixed-rate mortgages were between 1.5% and 2.1%, representing a significant decline influenced by lower capital market interest rates and banks' cheaper refinancing costs.

Development of mortgage market segments

The benchmark 10-year fixed mortgage rate fell from 1.92% at the end of March to 1.77% at the end of June 2023, while the benchmark 5-year mortgage rate fell from 1.63% to 1.40%. Around 50% of mortgages in Switzerland were for Saron mortgages, with the proportion of mortgages with terms of three years or less remaining at around 20%. In addition, fixed-rate mortgages with medium terms – between 4 and 7 years – accounted for around 25% of all transactions. Long-term fixed-rate mortgages with a term of 10 years or more are still most in demand, accounting for almost 50% of the deals explains finance and economics.

However, lower mortgage rates could soon face a new challenge. In March 2025, the SNB cut the key interest rate again from 0.5% to 0.25%, which, combined with ongoing tensions over US customs and security policy, leads to increased uncertainty about inflation. These factors could be loud Compare affect capital market interest rates, which rose significantly in the first quarter of 2025.

As a result of these uncertainties, banks' refinancing costs could increase, which would ultimately also affect mortgage conditions. The Saron mortgages have benefited from several key interest rate cuts in recent years and have therefore become around 1.50 percentage points cheaper. Nevertheless, it is to be expected that the benchmark interest rates for fixed-rate mortgages could increase due to rising capital market interest rates.