Interest rate forecast for mortgages

Recent significant cuts to interest rates on fixed-rate mortgages have provided less expensive financing options in the form of medium-term Saron mortgages. However, interest rates on long-term mortgages may rise again over the medium term.

Current economic outlook

Interest rates on longer-term mortgages have fallen sharply in Switzerland over recent months. These cuts are due to two main factors. Firstly, the global economy has weakened considerably. China is in recession, while Europe is at risk of sliding into one due to Germany’s weak economic performance. This is also impacting on the Swiss economy, which, due to the fact that it is small and open, has close links with the European and Chinese economies. The economic weakness has also caused Swiss inflation to fall more quickly than many economists expected.

Secondly, the central banks have responded to this economic news by not raising interest rates on the money market. The financial markets are actually starting to reflect the first interest rate cuts in their expectations for 2024. This has led some banks to cut their refinancing rates significantly, which they will probably pass onto their customers over the coming months.

At the same time, we can imagine that current capital market rates may be slightly too low. In light of rising rents and incidental rental costs, inflation in Switzerland is set to rise again slightly over the coming months. With expected inflation of over 2 percent, final yields to maturity of just 0.6 percent on 10-year Swiss federal bonds seem too low, which means a general increase in the interest rate level is expected over the course of the year.

Interest rate forecast for PostFinance mortgages

In den kommenden drei Monaten erwarten wir keine starken Veränderungen bei den Hypothekarzinsen. Angesichts einer schwachen Konjunktur und moderater Inflation ist im Jahresverlauf sogar wieder mit leicht sinkenden Saron-Zinsen zu rechnen. Gleichzeitig droht ein Anstieg der kapitalmarktorientierten langfristigen Hypothekarzinsen, weil auf Dauer Kapitalmarktzinsen nicht unter der erwarteten Inflation liegen sollten.

Forecast for3 months6 months12 months
Forecast for
SARON
3 months
=
6 months
=
12 months
Forecast for
5-year fixed-rate mortgage
3 months
=
6 months
+
12 months
+
Forecast for
7-year fixed-rate mortgage
3 months
=
6 months
+
12 months
++
Forecast for
10-year fixed-rate mortgage
3 months
=
6 months
++
12 months
++

Development of mortgage rates in Switzerland

With the easing of monetary policy due to the global financial crisis, interest rates on medium- and long-term mortgages have continually fallen. There was a reversal in trend only after the inflation problem that arose following the COVID-19 crisis. In mid-2022, the Swiss National Bank (SNB) tightened monetary policy considerably to rein in inflation, causing mortgage interest rates to go up again. However, interest rates on fixed-rate mortgages have dropped again recently due to the prospect of a relaxation to monetary policy, and they are now more than competitive against Saron mortgages. 

In percent

Source: SNB; the figures up to and including May 2021 are based on Libor and from June 2021 on Saron.

A Saron or fixed-rate mortgage

Weakening inflation and the prospect of monetary policy easing have led to a fall in swap rates and, as a result, longer-term fixed-rate mortgages. The costs of a medium-term, fixed-rate mortgage are now much lower than those for a Saron mortgage. As a result, a medium-term, fixed-rate mortgage is currently a more attractive financing option than the money market. To enable a Saron mortgage to compete with a fixed-rate deal, the policy rates in Switzerland will have to be cut not just quickly, but also significantly. However, long-term interest rates may rise again in the medium term, increasing the financing costs for a fixed-rate mortgage once more.

Source: PostFinance Ltd, SNB, SIX, Web Financial Group, SECO, KOF
  • At PostFinance, you’ll find the ideal financing solution for your property. A mortgage with a fixed rate or one where you can decide on the level of risk and security for yourself? We offer individual solutions to finance the purchase of your own home.

    Fixed-rate mortgage

    Perfect when interest rates are low and expected to rise You’re protected against interest rate rises and can plan your costs precisely.

    Term and interest rate

    Saron mortgage

    The Saron mortgage is ideal when interest rates are high to average and when rate cuts are expected. The interest rate can fluctuate significantly during the term, depending on the market situation. However, the option of switching to a PostFinance fixed-rate mortgage during the term means you remain flexible.

    Term

  • Single-family homes and condominiums

    Real estate prices for apartments and single-family homes fell slightly during the third quarter of this year. Significantly higher long-term capital market interest rates during the third quarter, the weak Swiss economy and gloomy consumer sentiment put the price trend under pressure. However, the tight supply situation continues to prop up prices and may well have prevented a more drastic correction. Rental property prices are currently rising. Rent rises – made possible by an increase to the reference interest rate – seem to have played a key role in making rental properties more attractive.

    Price index, January 2000 = 100

    Source: SFSO
  • IndicatorsQ1 2023Q2 2023Q3 2023202320242025
    Indicators
    GDP growth
    Q1 2023
    1,6%
    Q2 2023
    0,3%
    Q3 2023
    0,3%
    2023
    0,5%
    2024
    1,0%
    2025
    1,2%
    Indicators
    Inflation
    Q1 2023
    3,2%
    Q2 2023
    2,1%
    Q3 2023
    1,6%
    2023
    2,0%
    2024
    2,0%
    2025
    1,2%
    Indicators
    Unemployment
    Q1 2023
    2,1%
    Q2 2023
    1,9%
    Q3 2023
    2,0%
    2023
    2,0%
    2024
    2,2%
    2025
    2,4%
    Indicators
    Net immigration
    Q1 2023
    29‘000
    Q2 2023
    22‘000
    Q3 2023
    22‘000
    2023
    95‘000
    2024
    80‘000
    2025
    75‘000
    Indicators
    EUR/CHF exchange rate
    Q1 2023
    0,99
    Q2 2023
    0,98
    Q3 2023
    0,96
    2023
    0,97
    2024
    0,94
    2025
    0,91

    Source: Bloomberg, Web Financial Group, SFSO

  • This document and the information and statements it contains are for information purposes only and do not constitute either an invitation to tender, a solicitation, an offer or a recommendation to buy the related products. The customer or third parties are responsible for their own actions and bear sole responsibility for compliance with legal and regulatory provisions and guidelines. PostFinance has used sources considered reliable and credible. However, PostFinance cannot guarantee that this information is correct, accurate, reliable, up to date or complete and excludes any liability to the extent permitted by law. Information on interest rates and prices is up to date, but the actual development may deviate from these forecasts at any time. The content of this document is based on various assumptions. This means that the information and opinions are not a fixed basis for your financing decision. We recommend consulting an expert before making decisions.
    Full or partial reproduction is not permitted without the prior written consent of PostFinance.

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