When will reference rental interest rates decrease?

Real Estate
1

With the three recent interest rate decreases by the Swiss Central Bank, I was just wondering if anyone could predict approximately when the reference rental interest rate will correspondingly adjust (at three different dates, I suppose)? I know there is a time lag but am unsure about the details, and I found this UBS link (Current mortgage interest rates and interest rate trends | UBS Switzerland) but am wondering whether I am reading this correctly (in particular, should I be looking at the “Saron” forecast)?. Does anyone understand this fully and if yes, would venture to make a prediction?

2

There is data at link here

It seems that currently the underlying average of mortgages is 1.69%. If the mortgage rates have reduced between June to Sep, then this number would go down further , if that gets close to 1.5%, the reference rate would go down.

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3

Thanks! If I compare this with the date from there (Portail de données de la Banque nationale suisse) it seems that indeed the inertia is very significant: from June 2019 until August 2022 the central bank’s interest rate was negative (between -0.25% and -0.75%) and yet the reference rental interest rate only went down by 0.23% over this period of time (but I’m not there what the rate was before June 2019, since the BNS policy was very different before then)…

4

I think you cannot assume that mortgage rates completely follow the interest rates . However they would move down for sure

It could be that banks want to have higher margin . So even if the interest rate falls by 1%, it could be that banks only reduce mortgage by 0.75%

I heard that UBS has increased their margin.

5

BWO rate will fall to 1.5% either by December 2024 (50:50 chance, it’s going to be tight) or latest by March 2025. After that, no further decrease is expected (despite the expectation of another 50bps SNB reference rate reduction).

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6

Kinda make sense since any central bank rate change below 0 won’t impact the mortgage rates (mortgage won’t go negative).

7

Also don’t forget that there are a lot of non-SARON mortgages, where it’s the longer term interest rates that matter, not (directly) the current SNB policy rate.

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