The mortgage reference rate is 1.25% and therefore remains at the same level as the most recently published rate. This is reported by the Federal Housing Office. The reference rate, which is decisive in determining rents in Switzerland, has not increased since its introduction. But the record low of 1.25% will soon be a thing of the past.
The average rate for all outstanding mortgages in Switzerland is expected to increase by 0.25% in the first half of 2023. Maybe even on March 1, 2023, the next deadline. Zürcher Kantonalbank (ZKB) recently published this forecast with an analysis.
Spring cost shock
If the reference interest rate rises, landlords and landlords have the right to increase the rent by 3 percent at the next termination date.
Many tenants have to adapt to the increase in their rent. According to ZKB, half of the rented households can expect a significant increase in rents in the next five years. It is said that rents are likely to increase by around 15 percent by 2027 due to the interest rate.
The reference interest rate was introduced in the fall of 2008. It replaced the interest rates applicable to variable mortgages in individual cantons at the time. When it was introduced in 2008, the benchmark rate was still 3.5 percent, and then gradually dropped. And it hasn’t changed since it dropped to 1.25% in March 2020.