Impact of the SNB Interest Rate Decision on the Mortgage Market

The Swiss National Bank (SNB) lowered the key interest rate by 0.25 percentage points to 0.25% on March 21, 2025. This decision has far-reaching consequences for financing conditions in Switzerland, particularly for mortgages. But what does this rate cut mean for homebuyers, existing mortgage holders, and investors? In this blog post, we analyze the key impacts and show you how to find the best financing options for your property.

Published on: March 25, 2025 | Reading time: approx. 5-10 minutes

Reasons for the SNB’s Rate Cut

The Swiss National Bank (SNB) justified the rate cut with several key factors. One major reason is the significant decline in inflation, which has been further reinforced by lower electricity prices and a reduction in the reference mortgage rate. Additionally, ongoing economic risks, particularly the weak industrial sector in Europe and uncertainties surrounding U.S. trade policy, could further dampen price pressures. With this measure, the SNB aims to ensure that inflation remains within the target range of 0% to 2% in the long run.

The SNB’s decision directly impacts mortgage interest rates and therefore affects anyone financing a property or renewing an existing mortgage. For borrowers, this creates new opportunities, but it also requires careful review of their financing strategy.

Impact on the Mortgage Market

The interest rate cut directly influences the conditions of various mortgage models:

SARON mortgages become more affordable: Since SARON mortgages are directly linked to the overnight rate, borrowers benefit from lower financing costs. This makes variable-rate mortgages particularly attractive at the moment.

Fixed-rate mortgages in motion – where are they headed? Long-term fixed-rate mortgages already reached cyclical lows at the end of last year. Whether interest rates will continue to decline or stabilize over the course of the year remains uncertain. While another phase of negative interest rates currently seems unlikely, economic developments or further rate cuts could still cause additional shifts. At the same time, if interest rate cuts come to an end, fixed-rate mortgages could become slightly more expensive again. Anyone planning to take out or renew a mortgage should closely monitor these developments.

Revitalization of the real estate market: Lower financing costs strengthen confidence among potential buyers, leading to increased demand for homeownership. This could result in rising property prices in the coming months.

Looking Ahead: Will Zero Interest Rates Return?

The SNB has initiated rate cuts early, but it remains uncertain whether this was the last move. If the European economy continues to weaken or if the European Central Bank (ECB) further loosens its monetary policy, this could put additional pressure on the SNB. While a return to negative interest rates is not the preferred scenario, it cannot be ruled out in times of economic uncertainty. Find out more about potential future interest rate developments here.

Optimal Financing in Times of Falling Interest Rates

Given these developments, many borrowers are asking themselves which financing strategy is best. While SARON mortgages benefit from rate cuts in the short term, fixed-rate mortgages provide long-term planning security. A combination of both can also be a smart approach, allowing borrowers to take advantage of current interest rate benefits while minimizing risks. Comparing mortgage options is crucial to finding the best deals and maximizing potential savings.

Choosing the right mortgage depends not only on current interest rates but also on your individual financial situation and long-term plans. In a dynamic market environment, expert advice is essential to make the best decision.

Finding the Right Financing Solution

HYPOHAUS is your trusted financing expert, helping you find the best solution for your property financing needs. Our mortgage comparison tool provides a comprehensive overview of the best conditions, allowing you to tailor your financing strategy to your specific needs. Find an overview of HYPOHAUS services here.