With the three recent interest rate decreases by the Swiss Central Bank, I was just wondering if anyone could predict approximately when the reference rental interest rate will correspondingly adjust (at three different dates, I suppose)? I know there is a time lag but am unsure about the details, and I found this UBS link (Current mortgage interest rates and interest rate trends | UBS Switzerland) but am wondering whether I am reading this correctly (in particular, should I be looking at the “Saron” forecast)?. Does anyone understand this fully and if yes, would venture to make a prediction?

There is data at link here

It seems that currently the underlying average of mortgages is 1.69%. If the mortgage rates have reduced between June to Sep, then this number would go down further , if that gets close to 1.5%, the reference rate would go down.

Thanks! If I compare this with the date from there (Portail de données de la Banque nationale suisse) it seems that indeed the inertia is very significant: from June 2019 until August 2022 the central bank’s interest rate was negative (between -0.25% and -0.75%) and yet the reference rental interest rate only went down by 0.23% over this period of time (but I’m not there what the rate was before June 2019, since the BNS policy was very different before then)…

I think you cannot assume that mortgage rates completely follow the interest rates . However they would move down for sure

It could be that banks want to have higher margin . So even if the interest rate falls by 1%, it could be that banks only reduce mortgage by 0.75%

I heard that UBS has increased their margin.

BWO rate will fall to 1.5% either by December 2024 (50:50 chance, it’s going to be tight) or latest by March 2025. After that, no further decrease is expected (despite the expectation of another 50bps SNB reference rate reduction).

Kinda make sense since any central bank rate change below 0 won’t impact the mortgage rates (mortgage won’t go negative).

Also don’t forget that there are a lot of non-SARON mortgages, where it’s the longer term interest rates that matter, not (directly) the current SNB policy rate.