The Swiss Federal Office for Housing maintained its mortgage reference rate at 1.25% for the September assessment, a decision widely anticipated by economists and market observers.
The unchanged rate follows a one-year period at the current level, with the office citing stability in the underlying average mortgage rate. The reference rate remains tied to the average mortgage rate, which stood at 1.31% at the end of June. Adjustments occur only when the average rate falls below 1.13% or rises above 1.37%, thresholds not expected to be breached in the near term.
Analysts from major Swiss banks reiterated the likelihood of a prolonged period of stability. Raiffeisen’s chief economist, Fredy Hasenmaile, projected a theoretical earliest decline to 1.13% no sooner than mid-2030 under unchanged conditions. UBS’s Fabian Waltert noted that even during the negative interest rate period from 2015 to 2022, the average mortgage rate never reached the threshold required for a reduction.
Attention is now shifting to the timing of a potential increase. In a baseline scenario, economists surveyed by AWP expect the reference rate to remain flat for an extended period. UBS forecasts a rise to 1.5% only by the end of 2027, while Zürcher Kantonalbank (ZKB) projects a similar move no earlier than the end of 2028.
Risks to this outlook remain, particularly geopolitical tensions in the Middle East and energy price volatility. UBS warned that escalation in either area could lift inflation expectations, prompting earlier-than-expected Swiss National Bank (SNB) rate hikes. Under such a scenario, the reference rate could climb to 1.5% as early as mid-2027, according to the bank. ZKB concurred, suggesting earlier increases remain possible if the SNB tightens policy more aggressively than currently anticipated.
