The Swiss National Bank (SNB) surprisingly announces a turnaround in interest rates. This was possible because inflation was under control, said SNB boss Thomas Jordan today. Jan Baumann, head of the SRF business editorial team, classifies the consequences that the interest rate turnaround will have for homeowners, tenants and savers.
Jan Baumann
Head of Business Editor
Open the people box. Close the people box
Jan Baumann has been working at SRF since 2013 and has headed Radio SRF’s business department since the beginning of 2023. He previously worked as an editor for the newspaper “Finanz und Wirtschaft” for around ten years, including as a USA correspondent.
What does the SNB interest rate cut mean for homeowners?
Loans are becoming cheaper again, including mortgage loans. This means that the price of financing home ownership is decreasing, at least in trend. For example, if you have to renew a five or ten year mortgage, you can – generally speaking – expect the bank to be more accommodating when it comes to interest rates. Mortgage interest rates in Switzerland had previously risen for a long time. The reason: The SNB raised its key interest rates significantly from June 2022 to June 2023.
What does the decision mean for rents?
The interest rate cut is good news for tenants. Now the mortgage reference interest rate is unlikely to be increased again. Rents will therefore rise less this year than feared.
The background: Last year, the Federal Housing Office raised the reference interest rate in two steps from 1.25 to 1.75 percent. Some landlords took this as an opportunity to raise rents significantly. They were allowed to do that because the rule is: If the reference interest rate increases by 0.25 percentage points, landlords are allowed to increase the rent by 3 percent – provided they have passed on previous reductions. It is not yet possible to say whether the SNB’s interest rate cut will lead to the reference interest rate and rents falling again in the long term.
What are the consequences for savers?
The banks are only hesitant to adjust their savings interest rates for customers. The reason: They want to make money by earning more interest on loans than they pay savers on the other side. This is mainly why savings interest rates have only increased slightly recently. However, this trend is now likely to weaken again. The SNB decision dampens hopes of additional interest on savings accounts.