by Four times a year the rate of interest used to set the rents in Switzerland is reviewed. If the aggregate average mortgage rate goes down some renters can request lower rent. If it goes up some landlords can raise rents. This time the rate rose from 1.25% to 1.50%. Higher rents are likely to follow. Photo by Mikhail Nilov on Pexels.comThe interest rate used to set the rent reference rate was the average rate on Swiss mortgage loans outstanding at 31 March 2023. The average rate this time was 1.44%, up from 1.33% in the previous quarter. This rate is then rounded to the closest 0.25%. Any rate above 1.375% is rounded up to 1.50%. This is the first time since its introduction in 2008 that the rent reference rate has ever risen. It started at 3.5%, falling to a low of 1.25%. Now it’s
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Four times a year the rate of interest used to set the rents in Switzerland is reviewed. If the aggregate average mortgage rate goes down some renters can request lower rent. If it goes up some landlords can raise rents. This time the rate rose from 1.25% to 1.50%. Higher rents are likely to follow.
The interest rate used to set the rent reference rate was the average rate on Swiss mortgage loans outstanding at 31 March 2023. The average rate this time was 1.44%, up from 1.33% in the previous quarter. This rate is then rounded to the closest 0.25%. Any rate above 1.375% is rounded up to 1.50%.
This is the first time since its introduction in 2008 that the rent reference rate has ever risen. It started at 3.5%, falling to a low of 1.25%. Now it’s 1.50%.
It is likely the rate will rise again in the future as mortgagees continue to roll off older low rate mortgages and replace them with new ones at higher rates.
Since June 2022, when the Swiss National Bank (SNB) started raising its policy rate, the rate has climbed 2.25 percentage points from -0.75% to 1.50%. Some analysts expect the SNB to raise the rate to 1.75% and the Bank has hinted it might. This will add further pressure to the cost of some mortgages, which may impact the future rent reference rate and rents. The next SNB announcement on rates is scheduled for 22 June 2023.
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