Reference mortgage rate remains at 1.25%: what changes for rents (cross-border guide)

Context

In brief

• Reference mortgage rate confirmed at 1.25%
• The indicator is at an all-time low for a year now
• SNB maintains key interest rate at 0.0%, inflation at 0.4%
• Average mortgage interest rate at 1.31%, unchanged

Key Facts

• What: Reference mortgage rate confirmed at 1.25%
• When: Quarterly decision of the FOAB, published today
• Where: whole Switzerland (single national parameter)
• Who: Federal Office for Housing (FOH)
• Amount: 1.25% (policy rate), 1.31% (average rate), 0.0% (SNB policy rate), 0.4% (July inflation)
• Thresholds: Automatic triggers if average falls below 1.13% or exceeds 1.37%

The reference mortgage rate does not change: the indicator used to determine rents for rental apartments throughout Switzerland remains at 1.25%. This was announced by the Federal Office for Housing (FOH) this morning, confirming the forecasts of all economists interviewed by the AWP agency, who had predicted the status quo.

A level that has stood for twelve months

The parameter has been at this level, which has also been its lowest level for a year now. Today's decision is part of a very firm general interest rate picture, with the Swiss National Bank (SNB) maintaining its key interest rate at 0.0%. However, experts do not rule out a possible rise, in the wake of inflation which, although still under control (inflation in July was at 0.4%), shows signs of progress.

…

Operational details

What changes for tenants

If the rent is still based on a rate of 1.5% or higher, the right to a rent reduction remains in principle. To put this in context: if the reference rate rises by 0.25 percentage points, landlords can increase the rent by 3.00%; in the opposite case, tenants have the option of requesting a rent reduction of 2.91%. With the parameter stuck at 1.25%, those who are already aligned with this percentage see no changes, while those who pay a rent calculated on higher previous values retain the option of applying to the conciliation authority for a discount.

A history of downward movements

Since September 2008, the reference mortgage rate has been unified throughout Switzerland and has replaced the previously decisive rate for variable-rate mortgages in the individual cantons. The rate started at a peak of 3.5% and had fallen to a low of 1.25% for the first time in March 2020. In 2023, there were then two hikes, the first ever forward movements of the indicator, which brought the parameter to 1.75%, a level maintained between December 2023 and December 2024, when it had fallen to 1.5%. The last downward jump dates back to twelve months ago.

Outlook to 2027-2028

According to experts, the current rate of 1.25% could remain relatively long until 2027-2028, provided that major geopolitical or economic events do not give a strong boost to inflation, resulting in an increase in the SNB's key interest rate and, in turn, an increase in mortgage rates. For Swiss landlords and tenants, a phase of prolonged stability is therefore beginning, which allows them to plan family budgets with greater certainty, but which could come to an abrupt end in the event of external shocks.

…

Key points

How the request for rent reduction works

If you wish to assert your right to a rent reduction, the procedure involves sending a formal request to the landlord, indicating the current reference rate (1.25%) and the current rent calculated at a rate of 1.5% or higher. If the landlord refuses or does not reside within the deadline, the tenant can contact the cantonal conciliation authority within 30 days of the dispute. It is advisable to keep all documentation: lease agreement, previous notices and references to federal tenancy law.

When to expect the next update

The indicator is published quarterly by the FOAB. The next revision is expected in the months following 30 September, the reference date for calculating the next average rate. If the average interest rate were to fall below 1.13%, the parameter would rise to 1.00%; if it were to exceed 1.37%, it would rise to 1.50%.

Useful tools for tenants and landlords

If you want to simulate the impact of a possible rent increase of 3.00% or a reduction of 2.91% on your monthly budget, you can use the tools available on the website. For those who are considering buying a property, it is useful to consult the stipendio netto calculator to check the affordability of the mortgage payments compared to disposable income.

CTA finale: per pianificare il budget familiare e capire quanto incide il canone sullo stipendio, usa il [calcolatore dello stipendio.]

Source: swissinfo.ch