10-year FRMs currently cost 1.56 percent per annum, on average. That is just slightly higher than the annual low of 1.52 percent that we saw two weeks ago (refer to the interest rate table). Five-year FRMs also sit just above the annual low at 1.38 percent per annum, and two-year FRMs are the cheapest they have been this year, with an average annual interest rate of 1.30 percent.
SARON mortgages are cheaper than 10-year FRMs
As his first decision in his new role as president of the SNB, Martin Schlegel announced a major key interest rate cut of 0.5 percentage points. As a result, the interest rates of SARON mortgages have fallen by around 0.5 percentage points. The moneyland.ch Swiss Mortgage Index shows that the average interest rate of SARON mortgages is currently 1.49 percent. “That means SARON mortgages, on average, are once again somewhat cheaper than 10-year mortgages,” says moneyland.ch expert Felix Oeschger.
Outlook
Based on current inflation rates, there is nothing that speaks against a further loosening of financial policies in the first half of 2025. At 0.7 percent year-on-year, the inflation rate in November 2024 was comfortably within the SNB’s target range of 0 to 2 percent.
Many economists expect that the SNB will reduce its key interest rate to 0 percent by mid-2025. But even if that does happen, there are limits on how low fixed-rate mortgages can go. “Expectations have likely already been largely priced in to the interest rates of FRM offers,” says Felix Oeschger. The interest rates of 10-year FRMs have nearly halved since June 2023, while two-year and five-year FRMs are currently less than half as expensive as they were in June 2023 (see the Swiss Mortgage Index graph).
But if the SNB were to return to lowering its key interest rate into the negative zone, that would likely result in a new, radical reduction in the cost of FRMs. “From today’s perspective, that scenario seems possible, but unlikely,” says Felix Oeschger. Whether or not it comes to that depends, to a large extent, on international factors. If the euro and US dollar devaluate to strongly, the SNB will likely try to make the franc less attractive by further lowering its key interest rate.
The moneyland.ch Swiss Mortgage Index
The moneyland.ch Swiss Mortgage Index is based on reference interest rates published online, which moneyland.ch automatically records twice a day. The index for 10-year FRMs shows the daily average of interest rates from more than 30 banks and insurance companies. The index also tracks reference interest rates for fixed-rate mortgages with other mortgage terms, as well as adjustable-rate mortgages, construction loans, and SARON mortgages. In addition to the reference interest rates per lender and offer, moneyland.ch also calculates figures like the median, arithmetic average, mode, minimum, and maximum for various product groups like online mortgages, mortgages from banks, and mortgages from insurance companies.
More on this topic:
See the current interest rates in the mortgage comparison
Table: Overview of mortgage interest rates (German PDF)
Graph: Swiss Mortgage Index (German PDF)
