Interest rate forecast for mortgages

Current economic outlook

Status as at: 25.09.2025
Editorial deadline: 25.09.2025

The Swiss economy has remained solid so far this year in a difficult environment. It rose sharply in the first quarter in particular. Besides strong domestic demand, this was primarily due to orders to the USA being brought forward to pre-empt the tariffs. The pace of growth has slowed significantly since the start of the second quarter. However, a slump has been avoided so far.

This weaker trend is expected to continue in the coming months. The US tariff burden of 39 percent is hitting the export-led Swiss economy hard, as around 4 percent of value added can be attributed to US demand for goods, according to estimates by the State Secretariat for Economic Affairs (SECO). At the same time, there have been growing signs of weakness in domestic demand over recent weeks and months. This is reflected in the very pessimistic sentiment numbers for consumers and service providers.

Switzerland is one of the few currency areas where price stability More information Price stability is when the general price level of an economy fluctuates only slightly over time, i.e. neither rises sharply (inflation) nor falls in a sustained manner (deflation). In practice, price stability is often defined as annual inflation being in the range of 0 to 2 percent over the medium term. prevails in the long term. The inflation rate More information Inflation is the sustained rise in the general price level for goods and services in an economy over a particular period of time. When the price level rises, the purchasing power of money falls, i.e. fewer goods and services can be bought with the same amount of money as before. currently stands at 0.2 percent. In the medium term, there is even a risk that the rate will fall into negative territory, falling below the targets set by the Swiss National Bank (SNB). In light of weak economic and inflationary performance, a return to negative interest rates remains likely.

Interest rate forecast for mortgages from PostFinance

Pressure on the Swiss National Bank (SNB) to cut the policy rate More information Policy rates are interest rates set by central banks and are key monetary policy instruments. Policy rates determine the interest rate at which commercial banks can borrow liquidity from central banks. As a result, most short-term interest rates in an economy fluctuate with policy rates. again and, in turn, to introduce negative interest rates is likely to increase over the course of next year. This is due to expected economic weakness and the risk that inflation could fall below the zero percent threshold. Downward adjustments to administered prices, such as electricity, are anticipated at the start of the new year. The reduction in the reference interest rate More information The mortgage reference interest rate is published quarterly by the Federal Office for Housing (FOH) and serves as the basis for rent adjustments in existing tenancies. The reference interest rate is adjusted in line with the development of the mortgage interest rate. It is based on the average mortgage interest rate offered by banks and is rounded to the nearest quarter percent. is expected to reduce the pressure on rent prices. However, owners would not benefit from a further reduction in the policy rate as Saron mortgages usually have a floor of 0 percent. If the Saron falls below this, the interest payable remains unchanged. Medium- and long-term mortgages are also expected to move sideways, given the already very low level. The recent decision to abolish the taxation of imputed rental value is unlikely to have much impact, even though medium-term demand for mortgages may fall slightly as a result.

Development of mortgage rates in Switzerland

In 2022, interest rates on fixed-rate mortgages climbed to just over 3 percent due to monetary policy measures to combat high inflation. They did fall sharply after the central bank’s change of course last year and briefly stood at well below 2 percent. However, there has since been slight upward pressure again. This development is partly due to more restrained bank lending. The decision to abolish the taxation of imputed rental value is unlikely to have much impact. We anticipate that the majority of fixed-rate mortgages will trend sideways over the next 12 months. Conversely, we expect a further decline in the 3-month Saron as we expect an additional reduction in policy rates, not at the next assessment on 11 December 2025, but only in March 2026.

A Saron or fixed-rate mortgage

The PostFinance fixed-rate mortgage attractiveness index fell slightly again. It means Saron mortgages remain more attractive than fixed-rate mortgages. This is mainly due to the recent rise in capital market interest rates, which has made fixed-rate mortgages slightly more expensive. At the same time, Saron mortgages have remained largely stable. This is unlikely to change much in the medium term. Saron mortgages typically hit their low point at a policy rate of zero. Given the anticipated reduction in policy rates in 6 months’ time, rapid increases in prices are not expected. For medium- and long-term fixed-rate mortgages, we anticipate a sideways trend, given the limited scope for capital market interest rates. Money market financing More information Money market financing is available for a term of up to a year. should, in turn, retain its advantage over fixed-rate mortgages for the time being.

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