SNB Interest Rate Decision
Should I take out a Mortgage or wait a little longer?
As a approaches, many get nervous.
Should I wait a little longer, or should I now?
This question is crucial—and is often answered incorrectly.
The Swiss National Bank (SNB) sets Switzerland’s key interest rate several times a year. These interest rate decisions influence money market rates, banks’ refinancing costs, and thus, indirectly, mortgage rates as well. SARON mortgages, in particular, often react immediately to an SNB interest rate decision. For long-term fixed-rate mortgages, however, market expectations are the primary determining factor. Read more here: SNB Interest Rate Decision and Mortgages
Mortgage
A Mortgage is a loan for the purchase or construction of real estate in Switzerland, with the property serving as collateral. Mortgages can be arranged directly with a mortgage provider or through mortgage platforms. HYPOTHEKE.ch is the largest online mortgage platform. The most common types of mortgages in Switzerland are as follows: Fixed-rate mortgage,SARON mortgage
Explanation
The Swiss National Bank’s Responsibilities
The SNB sets the —not directly the The key interest rate influences the (relevant for which for banks, as well as expectations in the interest rate market.
However, mortgage rates do not react exactly in line with the decision, nor do they change immediately on the day the decision is made.
The key interest rate is the most important interest rate set by the Swiss National Bank (SNB). The SNB uses it to steer monetary policy and influence interest rates in the Swiss money market. If the key interest rate rises, loans and mortgages tend to become more expensive. If the key interest rate falls, financing costs may decrease. There is a particularly close correlation between the SNB key interest rate and effective mortgage rates, especially for SARON mortgages. Read more here: SNB Interest Rate Decision and Mortgages – Wait and See or Sign the Deal?
The Mortgage interest determines the cost of a Mortgage and is set individually by banks, insurance companies, or Pension funds. The mortgage interest rate depends, among other things, on the mortgage term, mortgage type, Loan-to-value ratio, and creditworthiness. Comparing different Mortgage offers via online financing platforms helps you find the best Mortgage rates for real estate financing.
The money market is the segment of the financial market for short-term capital. It is important for mortgages because benchmark interest rates such as the SARON are based on money market transactions and SARON mortgages.
Refinancing costs are the costs incurred by a mortgage lender to raise the funds needed to grant a Mortgage. Banks, for example, raise funds through customer deposits, the money market, or the capital market. If refinancing costs rise, Mortgage interest rates typically rise as well. They are therefore among the most important factors in Mortgage pricing.
Impact
What Does a Decision Change About Your Mortgage?
At SARON Mortgages
SARON mortgage rates track short-term interest rates almost directly: If the SNB’s key interest rate rises, the SARON rate rises as well—and vice versa.
Therefore, it doesn’t matter whether you sign the contract before or after the SNB’s decision.
For fixed-rate mortgages
On , interest rates are determined quite differently: They are based on supply and demand as well as on expectations regarding future interest rate trends.
The key point here is that the interest rate market trades on expectations—not on the current decision.
A fixed-rate mortgage is a mortgage with a fixed interest rate over an agreed-upon term. This means that the mortgage interest rate remains unchanged throughout the entire term, providing predictability regarding financing costs. Fixed-rate mortgages are among the most popular types of mortgages in Switzerland. Learn more here: Fixed-Rate Mortgages in Switzerland
SNB Interest Rate Decision
Wait and see or lock in a rate early?
When is the best time to —and how does an SNB interest rate decision affect this? In this video, you’ll learn what banks don’t tell you so that you can take out your Mortgage at exactly the right time.
@Mortgage
Florian Schubiger
Founder of Mortgage.ch
Misconception
A common mistake
Many borrowers think
“I’m waiting for the SNB’s decision; then I’ll know more.”
The reality, however, is quite different: The decision is often already factored into the price. If the expected outcome occurs, hardly anything changes—but if a surprise arises, the reaction is almost impossible to predict.
What Really Influences Interest Rates?
These and other factors constantly drive the markets—not just on the dates of SNB meetings:
Inflation
Rising is driving up mortgage rates as central banks take countermeasures and investors demand higher returns. If inflation falls, pressure on interest rates eases—and mortgage rates may drop.
Inflation refers to the general rise in prices for goods and services. As a result, money loses purchasing power over time. Inflation is important for mortgage borrowers because it has a major impact on the SNB’s interest rate policy and, consequently, indirectly on mortgage rates. If inflation rises sharply, central banks often raise interest rates. If inflation falls, interest rate cuts may become more likely.
Economic Development
A strong economy increases the demand for capital, thereby driving up interest rates—if the economy weakens, interest rate pressure decreases accordingly.
Job Market
A robust labor market with low unemployment signals economic strength and can lead to rising interest rates. If unemployment rises, the markets tend to expect key interest rates to fall.
Global Interest Rate Trends
Switzerland is closely integrated into global capital markets. When interest rates rise in the U.S. or the Eurozone, this often causes Swiss mortgage rates to rise as well—and vice versa.
When Should You Not Wait?
In most cases, waiting to sign a Mortgage is a mistake. If you have a good offer, the interest rates suit you, and planning certainty is important, then go ahead and sign the contract.
What Really Matters
Much more important than timing are strategy and The key factors for your mortgage are the right choosing the right provider, and effective negotiation.
This is where the greatest savings potential lies—not in perfect timing.
Learn more about this topic here:
How to Negotiate the Perfect Mortgage | How to Improve Your Mortgage Rating
Negotiating Mortgage Interest Rates
Most Mortgage interest rates are negotiable. The extent of your leverage depends on your creditworthiness, Loan-to-value ratio, affordability, and, above all, the alternatives you can present to the mortgage lender. If you obtain several comparable offers from banks, insurance companies, or Pension funds, you’ll significantly improve your negotiating position. Do you want to secure the best Mortgage without tedious negotiations? Use our Mortgage platform to do so. App.mortgage.ch
A mortgage loan model describes the type of interest rate structure and Term of a mortgage, such as Fixed-rate mortgage,SARON mortgage, or variable-rate mortgage. Transparent models make it easier to compare options and help you consciously manage interest rate risk and ensure planning certainty. Find more information here about mortgages with long terms: 10-year fixed-rate mortgage
Frequently Asked Questions
Answers regarding the impact of the SNB’s decision
No. The SNB influences the key interest rate, not mortgage rates directly. These are primarily determined by market expectations and supply and demand. However, SARON mortgages fluctuate almost in direct proportion to the key interest rate.
In most cases: No. The decision is often already priced into the market and has little effect on mortgage rates. If the SNB’s interest rate decision comes as a surprise, mortgage rates may fluctuate more significantly on that date. The problem is that a surprise is virtually impossible for anyone to predict.
Yes. SARON mortgages track the base rate almost exactly. That’s why the timing of the loan agreement hardly matters.
Indirectly. Fixed-rate mortgages respond to interest rate expectations, not to the decision itself. And those expectations are already factored into interest rates.
Yes. If the market had anticipated the rate hike or expects future cuts, interest rates may even fall following an SNB policy rate hike. It always depends on what the market had expected from the SNB’s rate decision and what actually happened at the rate-setting meeting.
Because markets anticipate expectations. Investors act in advance—not just on the day a decision is made.
Waiting too long. Many people hope for lower interest rates—and then end up locking in higher rates later on because they eventually can’t wait any longer.
Do's and Don'ts
What You Should and Shouldn't Do
This is a good starting point for competitive mortgage rates
What You Shouldn't Do When the SNB Announces Its Interest Rate Decision
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