Mortgage benchmark rate remains at record low of 1.25 percent

Context

In brief

• The mortgage reference rate remains at 1.25 percent
• Rents in Switzerland will remain unchanged
• Decision of the Federal Office for Housing (BWO)

Key Facts

• What: Mortgage Reference Rate
• When: September 2025
• Where: Switzerland
• Who: Federal Office for Housing (BWO)
• Amount: 1.25 percent

The mortgage reference rate remains at an all-time low of 1.25 percent. This decision by the Federal Office for Housing (BWO) means that rents in Switzerland will remain unchanged for the foreseeable future. The reference rate fell to 1.25 percent in September 2025, after previously being 1.5 percent. This means that the average interest rate determining the reference rate remains unchanged at 1.31 percent. The rate is rounded commercially to quarters of a percentage point, so the reference rate only falls or rises when a corresponding threshold is exceeded. Currently, this threshold is set at 1.13 percent for a reduction and 1.37 percent for an increase.

History

The mortgage reference rate fell to 1.25 percent in September 2025, after having previously been 1.5 percent. This means that the average interest rate determining the reference rate remains unchanged at 1.31 percent. The rate is rounded commercially to quarters of a percentage point, so the reference rate only falls or rises when a corresponding threshold is exceeded. Currently, this threshold is set at 1.13 percent for a reduction and 1.37 percent for an increase.

Concrete examples

In cantons like Zurich and Geneva, where the cost of living is high, this decision has a significant impact. For example, an average rent of CHF 2,000 in Zurich will remain the same, offering some breathing room for residents who already face high housing costs. Similarly, in Geneva, where rents are among the highest in the country, tenants can continue to plan their finances without worrying about sudden increases.

Policies and dates

The BWO's decision is in line with the federal legislation governing rents in Switzerland. According to Article 270 of the Swiss Code of Obligations, rents can only be increased if the mortgage reference rate exceeds a certain threshold. Currently, this threshold is set at 1.37 percent for an increase. This means that as long as the reference rate remains below this threshold, rents cannot be increased.

Operational checklist

For tenants and property owners, here is an operational checklist to navigate this context: 1. Lease Verification: Make sure your lease complies with federal regulations. 2. Benchmark rate monitoring: Keep an eye on BWO decisions and changes in the mortgage reference rate. 3. Legal advice: If you have any doubts, consult with a lawyer who specializes in real estate law. 4. Financial planning: Plan personal or business finances based on current market conditions.

Comparison of practical scenarios

Let's consider two practical scenarios: 1. Scenario A: The mortgage reference rate remains at 1.25 percent. In this case, rents remain unchanged, offering stability to tenants. 2. Scenario B: The mortgage benchmark rate rises to 1.5 percent. In this scenario, rents could rise, putting pressure on tenants, especially in high-cost areas such as Zurich and Geneva.

Conclusion

The BWO's decision to keep the mortgage reference rate at 1.25 percent offers a period of stability for Swiss tenants. However, it is important to monitor future decisions and changes in the reference rate in order to plan appropriately.

Operational details

Mortgage benchmark rate remains at record low of 1.25 percent

The stability of the mortgage reference rate has concrete implications for tenants in Switzerland. With the reference rate remaining at an all-time low of 1.25 percent, rents are set to remain unchanged for the foreseeable future. This is a relief for many tenants who feared rising housing costs. However, it is important to note that in the event of an increase in the reference rate of 0.25 percentage points, landlords could in principle increase the rent by 3 percent. Conversely, in the event of a reduction, there would be the option of requesting a rent reduction of 2.9 percent.

Practical Implications

The stability of the mortgage reference rate is a crucial factor in determining rents in Switzerland. With the rate remaining at an all-time low, tenants can breathe easy knowing that their housing costs will not increase in the near future. However, it is important to monitor any changes in the reference rate, as these can have a significant impact on rents.

Concrete examples

For example, in a city like Zurich, where rents are already high, a 3 percent increase could mean a difference of around 100 francs per month for a three-room apartment. This could have a significant impact on the household budget. On the other hand, a reduction of 2.9 percent could lead to savings of around 90 francs per month, offering some financial breathing room.

Standards and Regulations

In Switzerland, the Federal Law on Tenancy and Building Rights (LLD) of 2000 regulates rent increases. According to this law, rents can only be increased once a year, and the increase must be proportional to the increase in the mortgage reference rate. For example, if the reference rate increases by 0.25 percentage points, the maximum permissible increase is 3 percent.

Operational Checklist for Tenants

1. Monitor your reference rate: Keep an eye on changes in your mortgage reference rate. 2. Compare Rents: Compare your rents with those of other tenants in your area. 3. Consult the Law: Educate yourself about local regulations regarding rent increases. 4. Contact the Landlord: If you notice an unjustified increase, contact your landlord to discuss the matter. 5. Use a Mediator: If necessary, use a mediator or tenants' association to resolve any disputes.

Practical Scenario Comparisons

Let's consider two practical scenarios:

1. Rise Scenario: If the reference rate increases by 0.25 percentage points, a tenant in Geneva who pays a rent of 2,000 francs per month could see an increase of 3 percent, bringing his rent to 2,060 francs per month. 2. Reduction scenario: If the reference rate decreases by 0.25 percentage points, the same tenant could request a reduction of 2.9 percent, bringing his rent to 1,942 francs per month.

Conclusion

The stability of the mortgage reference rate is a key factor in determining rents in Switzerland. With the rate remaining at an all-time low, tenants can breathe easy knowing that their housing costs will not increase in the near future. However, it is important to monitor any changes in the reference rate, as these can have a significant impact on rents.

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Key points

Mortgage benchmark rate remains at record low of 1.25 percent

For tenants in Switzerland, the stability of the mortgage reference rate is good news. However, it is important to be prepared for any future changes. If the reference rate were to rise, landlords could demand an increase in the rent. On the other hand, if the rate were to decrease, tenants could demand a reduction in the rent. It is therefore crucial to monitor the decisions of the Federal Office for Housing (BWO) and be ready to take the necessary measures in the event of changes.

Actions to Take

Tenants should monitor the decisions of the Federal Office for Housing (BWO) and be prepared to take the necessary measures in the event of changes in the mortgage reference rate. If the rate were to rise, landlords could demand an increase in the rent. On the other hand, if the rate were to fall, tenants could demand a rent reduction. It is therefore important to be informed and prepared for any changes.

For more information and to calculate your net salary, please see our calcolatore stipendio.

Concrete Examples and Regulations

In Switzerland, the mortgage reference rate is currently set at 1.25 percent. This rate is decisive for the calculation of rents, as landlords can adjust rents based on changes in this rate. For example, if the reference rate increases by 1 percent, a landlord could request a 5 percent rent increase, as stipulated in the 2019 Federal Rent Act (VVG).

In cantons such as Zurich and Geneva, where rents are already high, an increase in the reference rate could have a significant impact on households. For example, a monthly rent of 2,000 francs in Zurich could increase by 100 francs if the reference rate increases by 1 percent. On the other hand, if the rate decreases, tenants could see a reduction in rent, although reductions are generally less frequent than increases.

Operational Checklist for Tenants

1. Monitor BWO Decisions: Subscribe to newsletters or follow BWO press releases to stay up-to-date on mortgage reference rate decisions. 2. Consult the Rental Agreement: Check the clauses relating to rent adjustments and the conditions for requesting a reduction. 3. Calculate the Financial Impact: Use online calculation tools to estimate the impact of an increase or decrease in the reference rate on your rent. 4. Contact the Landlord: If there are any changes to the reference rate, please contact the landlord to discuss any rent adjustments. 5. Seek Mediators: If you cannot reach an agreement with your landlord, consider using a mediator or a lawyer who specializes in rental law.

Practical Scenario Comparisons

📊 Reference Rate Increase Scenarios Zurich: A rent of 2,000 francs could increase by 100 francs if the reference rate increases by 1 percent.

• Geneva: A rent of 1,800 francs could increase by 90 francs with the same increase in the reference rate.

📊 Scenarios of Decrease in the Reference Rate Zurich: A rent of 2,000 francs could fall by 100 francs if the reference rate decreases by 1 percent.

• Geneva: A rent of 1,800 francs could fall by 90 francs with the same decrease in the reference rate.

Conclusion

The stability of the mortgage reference rate is an advantage for Swiss tenants, but it is essential to be prepared for any changes. Monitoring BWO decisions, understanding current regulations, and being ready to take the necessary steps are crucial steps in dealing with changes in the reference rate. For more information and to calculate your net salary, please see our calcolatore stipendio.

"Preparation is key to dealing with changes in the rental market." - Federal Office for Housing (BWO)

Source: tio.ch