Mortgage benchmark rate remains at record low of 1.25 percent (cross-border guide)

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.

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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.

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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.

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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).

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