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Mortgage reference rate is very likely to rise on 1 June. Most experts now assume so. In the background of this development lies the fact that mortgage interest rates have broken from their historical lows as part of the return in interest rates.
The return in interest rates is also reflected in the rental market.
The Federal Housing Office left the interest rate at 1.25% in its last assessment in March. This has been at a record low since March 2020.
However, the average interest rate on domestic mortgage receivables, on which the reference rate is based, rose from 1.18 percent to 1.33 percent even then. If the quarterly calculated value now rises above 1.37 percent, the reference interest rate will be increased to 1.50 percent; rounded up or down to the nearest quarter of a hundredth.
almost 3 percent higher
This would be bad news for tenants. Because if the reference interest rate is increased by 0.25 points, landlords can increase the rent by 2.9 percent, provided that they skip previous discounts.
As a reminder, the rate was 3.5 percent when it was introduced in 2008, then gradually decreased. According to an estimate by Zürcher Kantonalbank, currently about half of all lease agreements are based on the current reference interest rate.
These tenants should be prepared for increases in the near future, as the AWP news agency survey of a dozen large landlords reveals. “We assume that if the expected reference interest rate increase occurs, we will adjust the affected lease contracts in our portfolio accordingly,” says Swiss Life insurance group, one of the largest homeowners in the country. However, it is too early to say exactly when and how much regulations will be made.
UBS does not want to commit itself
But some homeowners don’t want to be so clear right now. Axa wants to “analyze each tenancy separately and consider an adjustment individually.” Mobiliar and Helvetia are also looking to look into lease rentals.
Some famous real estate owners don’t want to show their cards yet. These include the pension funds Coop and Migros, as well as the big bank UBS, which has become an even more important player in the Swiss property market after the forced merger with Credit Suisse. Major real estate service providers Wincasa and Livit also declined to comment.
Inflation comes on top of that.
However, due to the already high inflation, it is not a problem to do without a raise. On the contrary: Many landlords want to pass inflation on to tenants in addition to the reference interest rate. Zurich for example due to market rents, provided this is possible. Real estate company Allreal also says, “In addition to the higher rents from the reference interest rate, some of the inflation is passed on to tenants.”
In terms of time, most landlords should send letters immediately after the reference interest rate is published so that the increase is applied as soon as possible. The notice period is very important. Many tenancies can now be terminated every month, but some can only be terminated quarterly.
Not everyone participates
Landlords who do not explicitly plan an increase are rare. This includes SBB. “A general rent adjustment is not currently scheduled due to a possible increase in the reference interest rate during the summer,” Federal Railroads said.
It is complex with housing cooperatives. As a rule, they charge the lease, which, according to a spokesperson, should take into account the actual mortgage interest rate, not the reference interest rate. But according to the spokesperson, some still trust him.
Globalization of inflation is not a problem for cooperatives, since only actual cost increases, eg for maintenance, can be reflected in the cost of rent.
Is the system still up to date?
Meanwhile, large landowners disagree on whether the reference interest rate system is still up to date. Mobiliar, for example, is crucial: it prefers “a simple, generally understandable system that will do justice to price fluctuations”. He particularly praises the current practice of commercial leases, where the rent is adjusted annually according to the national consumer price index.
Allreal disagrees: The system with the reference interest rate is created, accepted and understood by all parties. “In recent years, tenants have benefited from lower rents thanks to falling mortgage interest rates, but it’s understandable that the pendulum is now swinging the other way with the rising financing costs of landlords.” from the real estate company. (SDA/koh)
Source : Blick
I am Dawid Malan, a news reporter for 24 Instant News. I specialize in celebrity and entertainment news, writing stories that capture the attention of readers from all walks of life. My work has been featured in some of the world’s leading publications and I am passionate about delivering quality content to my readers.
