Rather surprising move from the SNB. Can we expect mortage rates to go down as well and by when?
Reductions were already priced in, but presumably with a slightly different timeline. So probably a bit, but not too much, like not the whole 0.25%. Unless you have SARON of course.
At least thatâs my understanding.
Can I think the X Years IRS Interest Rate Swap Bond Yield as the cost of the bank to issue mortgage fixing X years? By adding they margin, 0.5%-1%, then it is more or less what they offer to individuals the interest rate of their mortgage fixing X years?
Expect to see the next decrease in September or December. Weâre going back to below 1% in 2025 in my opinion.
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Yes. To borrow from others money that they lend to you afterwards.
Bond yield is a different thing.
Thanks for the reply. The title of the link says
CHF 10 Years IRS Interest Rate Swap Bond Yield - Investing.com
So does it make sense to call it IRS Bond Yield. I donât have enough knowledge on these derivatives
optimist, as usual 
1% could be, but below looks unlikely if you want to believe the economists from ZKB or UBS.
I will have to sign my mortgage contract around August/September. My employer heavily subsidizes employee mortgages: 1-10Y fixed at 0.1% margin over refi rate and 0.2% margin on Saron. Letâs see what the swaps will do in the next couple days, but I will most likely go 100% Saron.
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whatâs the current 10 year rate you can get?
| Duration | Rate |
|---|---|
| 1-6 years | 1.30% |
| 7-8 years | 1.35% |
| 9-10 years | 1.40% |
| Saron | Saron +0.2% |
There is however a an uplift if the employment ends, +0.55% for fixed mortgages and +0.45% for Saron. Iâm not likely to quit in the next 2-3 years and the company is doing very well, but you never know what the future holds. Given the uplift for fixed mortgages is quite substantial, I would probably avoid any fixed mortgages longer than 3 years, or how do you guys see my situation?
Same like you. I wouldnât get a fixed rate mortgage if the interest rate can change. Plus Saron will very likely get down to 0.95-0.97% by the end of the year.
Yes, so fast I havenât even yet seen the effect of the last decrease in my Saron mortgage rate 
Fixed rate mortgages arenât linked to the SNB rate. They correlate with expected future interest rates and expected future inflation.
I see that now the 10 year IRS is at 1.128. Can I understand that the margin is more or less 1.40% + 0.55% - 1.128% = 0.822% ïŒ It would be relevant for me as well since I would need to fix one soon.
so these are employee-only rates from my employer. The bank internal refinance rate (for my employer, this varies for every bank) as of today for 10 years is 1.29%, then a +0.10% margin is applied and rounded to 1.40%.
The +0.55% only applies if one leaves the firm, so the 10Y would go up from 1.40% to 1.95% for the remaining duration. Not a terrible rate, but far from the best offers.
Externally the bank charges a significantly higher margin over refinance rate.
Current swap rates:
2 years: 0.9625
3 years: 0.9425
4 years: 0.9325
5 years: 0.9425
6 years: 0.9525
7 years: 0.9725
8 years: 0.9925
9 years: 1.0125
10 years: 1.0325
Itâs not exactly the refinancing rate of the bank, but pretty close to it. Add a margin of 0.7-0.9% and you get the interest that you should get from your bank.
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My advice is to assume you will work there forever. I thought Iâd be in Switzerland for 2 years, it is coming close to 2 decades now.
I thought Iâd be at my job for just 5 years so didnât take the long term incentives - Iâve been there now for over a decade and likely until retirement - the loss on that decision has been huge.
Decorate your rental home as if you owned it and will live there forever. Make friends with neighbours as if they will be there forever.
I found that people who follow this are happier, even if their plans do change in 2 years time.
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I see your argument, and your approach to life resonates with me. However, I would still question if I should lock-in a fixed mortgage, the only reason for doing that is locking in a relatively low rate. But I see various benefits for a Saron:
- Saron is currently +/- equally expensive in comparison to fixed rate across all durations
- has a high likelihood to become cheaper in the mid term
- (specific for me): no risk of being locked in with an uplift in case of job change, can terminate contract within 90 days
Will have to wait for August to make the decision, so lots of debating stillâŠ
Saron is like investing in stocks. There will be painful times but in the end it will be worth it. If you donât try to time the stock market, you shouldnât do it with interest rates aswell.
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Agree. While rates are still not as low as the bargains we had in past years (<1%), even the 1.4% is still pretty low. So it really comes down to whether you want to reduce the volatility of interest payments versus maintaining flexbility.
The situation in France might impact rates in CH. CHF got more expensive in the past week and this could persist if the spread on the French 10 year OAT vs Germany 10 year Bund keep increasing. A new Greece type event would again send rates in CH to the cave. Iâm 100% SARON, will remain for at least another year till my flat get a new valuation so I can stop the repayment.
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