I received an offer for a 10-year fixed mortgage with a 1.45% interest rate and seem like the best the brokers could get. The bank also allow to take part of the mortgage as SARON with a 0.9% margin for a maximal of 3 years.
Given the current interest rate situation in Switzerland, how should I be thinking about this?
My basic approach to compare is to look at:
fixed mortgage: 1.45% x mortgage x 10
SARON: X% x mortgage x 3 + Y% x mortgage x 7 (where X is 0.9 for now but can only go up during these 3 years and Y is what I could get in 3 years)
For SARON to make sense assuming the best scenario we stay at 0% (i.e. X=0.9) I would need to get a 1.68% rate on a 7-years mortgage (the same bank would currently offer this with 1.28%).
For the fixed mortgage, it sounds like in the case where the rates stay as they are today I would lose roughly 3% of the mortgage amount in total. If rates go up to 0.3-0.5% it would pretty much be the same, and if it gets higher than that I should have taken the fixed mortgage.
So I am leaning towards just taking the fixed mortgage. In particular I may reduce my revenues during the upcoming 3-year period and if I have to handle a mortgage renewal it may be annoying.
Am I underestimating the difference? Something else I should be accounting for?
says this is a rather bad SARON margin and an ok-ish fixed mortgage. You sure, you canât get a better one? Some months ago, I got a new SARON mortgage for 0.75% margin.
In general, a SARON mortgage has a better expected return. Are you really dependent on rates being fixed at a lower rate? If the answer is no, use a SARON mortage, do not split your mortgage and always switch to the cheapest (and trustworthy) provider.
If the answer is yes, just know that you not fixing that âyesâ costs you that difference.
On the 10 year side best rate I ve seen recently is around 1.3-1.35 but depends on profile and connections, so 1.45 is in line with the current market conditions. On the saron side 0.9 is definitely crap.
I agree with the others that you can probably get a better SARON rate if you shop around a bit more. Just to illustrate, comparing the best available SARON (at 0.55%) versus your offer (at 0.90%) means possibly paying 3.5K more each year over a decade for a 1M mortgage.
But even if a 0.9% margin is the very best you can get, I would still go for a SARON mortgage first, until you know for sure that your circumstances (income) will change. I have my mortgage with Swissquote/LUKB, and they allow shifting to a fixed rate almost immediately. Iâm sure a lot of other lenders also offer that flexibility.
Since you mentioned that your revenue may (or may not) decrease in the coming years, it could be a good strategy to convert it to a fixed mortgage if and when that is about to happen. And even then, I would go for a fixed rate for the shortest possible time as appropriate for your situation (i.e. if you are sure you can go back to or surpass your previous earning capacity after 3 years, then you can maybe go for a 4-year fixed rate, then go back to SARON.)
Another possibility is to go for a 4- or 5-year fixed now, then see what the market is like when you renew. The only situation Iâd go for a 10 year fixed rate outright is if there is an unbearable amount of uncertainty in the timing of your potential income reduction - otherwise, itâs SARON all the way.
To add to all of this, on the risk side remember that the 33% rule is based on 5% interest rates. With actual rates being closer to 1% (or even below with SARON as described above), that means that the max mortgage you can take right now will be at most ~6% of your gross income as interests.
So even cutting your income by 3 or a tripling of the rates still gives you a lot of breathing room by staying below 20%.
Compared to how many people are renting at ratios quite a bit closer to this 33%, I find the risk to be pretty low. Of course it it were to happen, itâs quite a bit more painful when you own than rent.
Just my point of view. But I found the actual figure helpful to me decide, especially since I was a bit worried with my partner planning to move to 80%.
From what I understand it depends quite a bit on the size of the mortgage (~2M) and other criteria (e.g. notary appointment is in November but move in date is summer 2026). In my case, both brokers and all the online comparison tool I found online suggest 0.75% is the best SARON I can hope for and 1.37% is best 10-years fixed.
With all the details of my personal situation, both brokers (including hypotheke.ch) came back with 1.45% as their best offers for the 10-years fixed rate. So maybe I could try to squeeze 0.05% negotiating or play the time card in the hope I can get something better in a few weeks (I need a mortgage promise for the notary).
Regarding SARON I am somewhat skeptical, because it seems the only way to make a profit is if the interest rates stay at 0% for the next 3 years. If I look at the last 3 years it went up and I donât think I would have been able to buy the bullet and would probably have fixed the rate and be even worse off. In the current world where a tweet can trigger a financial crisis and especially with Switzerland being so tied to what is happening in the US, it feels like a pretty big gamble with minimal upside potential.
From what I here most people take fixed-mortgage. Is the bias here that people in this forum are less risk-averse than the average Swiss person?
Less risk-averse isnât how I would put it. We tend to have a downright risk friendly approach (not saying it is a good or a bad thing, just making an observation). My guess is that it comes from a mix of:
very positive market returns in our investing career blinding us to the real risk of equities (and other risks from other assets and liabilities).
having a financial cushion and living below our means meaning we can actually face many difficulties in life and adapt to them rather than being destroyed by the first unplanned repair on a car.
financial education combined with a willingness to go for the cheapest option available which make us not value insurance much (fixed rates are an insurance against rate variations).
Well I have no crystal ball but by mid term there are not many reasons for Rate increase.
Trump is about to take control of the FED and according to me he will not only decrease reference rate but also proceed a massive QE type where the FED will buy some long term bond to decrease long term rates which should lead to cheaper mortgages in US. And he would do it fast because mid terms are coming!
World governments are flooded with debts.
Switzerland must have low rate to avoid currency appreciation. Of course if negative long term rates are coming back Iâll fix my mortgage but not for now.
PS: 0,9% for smaller mortage in peripherals region like Wallis itâs nowadays a decent offer as banks are rising margins and lowering risks
Then just donât? Nothing wrong with a 10-year fixed.
Great points. If I may add, a 10-year fixed is âonlyâ 10 years. Eventually youâll have to re-new (or amortize or sell).
I know itâs a long time, but most home buyers probably plan with a longer time horizon.
I am currently doing a benchmark for my primary residence purchase. The first feedback I received is from UBS who proposed me 1.15% on 5Y ; 1.45% on 10Y ; 1% Saron. But they could only lend me 75%, not 80%, so Iâll skip.
Iâve read someone on this thread mentioning Saron at 0.55% from Swissquote, which seems extremely attractive, but almost too good to be true. Do you think itâs a ârealâ achievable rate ? Or just something on paper that theyâll never offer to the average client ?
My current mortgage will expire in 2026, and Iâve started exploring refinancing options. UBS seems to have an attractive offer, but I havenât requested formal terms yet.
Do you know if year-end is a good time to begin negotiations, or is it better to wait until early next year? I heard (though not confirmed) that banks work with annual mortgage quotas that reset in January.
According to the article dedicated on mortgages on this website, the end of the year might be a good period as some bankers are trying to reach their yearly target numbers to receive their bonuses.
Itâs real and achievable. See my post (#361 in this thread) for details. In fact we have our quarterly payment due tomorrow (the first full quarter at 0.55%), and Iâve never been excited to pay for housing as I am now
That is a great SARON rate. You are on a 3 year lock, correct? What happens as you get close to that 3 year? can you stay on a flexible SARON and they increase the margin? how would you switch lenders without having to pay a âfowardâ if you wanted to switch lenders and to a fixed?
0.5% to 0.6% margin used to be the going rate 3 years ago. So far, no margin increases from my bank, a big regional lender. No lock-in period. Well, 3 or 6 months cancellation period, Iâd actually have to look it up.
Since then, I understand many banks increased their margins, but seems some still offer in that range and are interested to extend their mortgage volumes.
On a slightly different note: do you know which rates can you get for an investment property? I checked on moneyland but it seems a bit optimistic with real life offers.
Iâm getting 0.75-0.8% with Raiffeisen for investment properties. You could maybe get better around 0.6-0.7% if you negotiate/compare more, but lower than that will probably be hard imo.
I get today for renewal the following option as of April 2026 - transfer everything into SARON for 1 year (0.75%) and then starting April 2027 a 9-year fixed with 1.4% (without forward) for 80% and 20% stays in SARON. Would you go?
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