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Further increase in SNB rates: what impact will this have on mortgage rates?
The Swiss National Bank (SNB) announced another increase in its policy rate on 23 March 2023. The Saron rate is changing from 1% to 1.5% and short-term mortgage rates, based on Saron, will now be between 2% and 3%. Paradoxically, fixed-rate mortgages are not directly affected.
Why have the central banks increased their policy rates?
The central banks’ policy rates are primarily used to adjust the monetary policy for a currency, predominantly in order to manage inflation. This policy rate, known as Saron in Switzerland, also serves as the basis for the calculation of short-term mortgage rates.
What are the consequences for mortgage rates?
The SNB’s Saron rate, now at 1.5%, will directly affect short-term mortgage rates, which may rapidly increase to between 2% and 3%.
Although this increase in rates will have a – temporary – negative effect on mortgage holders who have opted for a short-term strategy, basing themselves on Saron, the phenomenon is not expected to persist in the longer term. It is likely that we will see the Saron rate stabilise this year, or even fall, as long as inflation returns to an acceptable level.
Paradoxically, this is not necessarily bad news for the development of fixed-term mortgage rates.
What are the most favourable rates?
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