The Saron mortgage is a money market mortgage based on the Swiss reference interest rate SARON® (Swiss Average Rate Overnight). The interest rate on the Saron mortgage is variable: if the SARON® falls, the mortgage interest rate falls; if the SARON® rises, the mortgage interest rate rises. Unlike a fixed-rate mortgage, the interest rate for this financing solution is not fixed in advance over the term, but is adjusted every three months.
SARON® is calculated daily by SIX based on the interest rate at which Swiss banks lend each other money overnight. The Saron mortgage uses the Compounded SARON® so that interest can be charged “only” every three months instead of daily. This corresponds to the compounded individual SARON® daily rates (The link will open in a new window current interest rates and exchange rates at snb.ch) for the past three months. The compounded SARON® is generally close to the Swiss National Bank’s policy rate.
In addition to the Compounded SARON® money market reference interest rate, the Saron mortgage comes with an agreed, customer-specific margin. The margin remains unchanged over the entire term.