With the current policy rate of 0.50 percent, we find ourselves in a slightly expansive monetary policy environment.
The Swiss National Bank (SNB) lowered its key rate by 0.5 percentage points last December, to 0.5%. However, the impact on the bond markets was only slight. Yields on 10-year Swiss government bonds moved sideways until the end of December, as did mortgage rates for the same duration. However, at the beginning of January, bond market volatility increased significantly.
In 2025, inflationary pressure in Switzerland, but also in the United States and Europe, should continue to decrease and leave central banks with the necessary room to maneuver to continue lowering their key rates. For the SNB, however, this margin is limited given an already low level of 0.5%, which is why we only expect a further decrease to 0.25%.
This drop is already expected by the capital market and, if it occurs, is not expected to significantly affect the rate structure in Switzerland. UBS experts therefore see little further potential for a sharp reduction in mortgage rates. Those indexed to SARON should continue to fall slightly.
Please note that the interest rate shown is a forecast, which may vary downward or upward.
Swiss
