The Swiss National Bank’s zero-percent interest rate, in place since June 2025, means mortgages should be very cheap. And yet, 10-year fixed-rate mortgage rates have increased. How can this be explained?
Despite the zero-percent rate, interest on 10-year fixed-rate mortgages have gone up from 0.39 to 0.66 percent in 2025.
Not only that, but banks are also demanding that homebuyers bring in more capital – above and beyond the 20-percent down payment typically required for such loans.
Their financing costs, therefore, are higher than what the drop in the interest rate would have suggested.
Why is this happening?
According to David Marmet, chief economist at Zurich Cantonal Bank, this is partly due to covered bonds – a type of bond issued by banks for the long-term refinancing of mortgage loans that is considered particularly safe.
Yields on these bonds have remained virtually unchanged over the past year, or even increased slightly.
“As a result, financing costs for many mortgage seekers are higher than initially expected given the interest rate decline,” he explained.
But there is more.
The Basel III regulations, a global regulatory framework for banks, which came into effect at the beginning of 2025 to strengthen the banking sector in terms of solvency and liquidity, have also increased mortgage costs.
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What’s ahead?
More of the same, it seems.
“With the stable key interest rate outlook, there should be little movement in Swiss long-term interest rates,” said Raiffeisen economist Alexander Koch.
Is there any good news for mortgage seekers?
Yes, SARON mortgage rate remains at zero percent for the time being.
SARON is different from other mortgages because it is not a fixed but a variable-rate loan, an acronym for Swiss Average Rate Overnight (SARON).
Since the SNB cut its key interest rate to zero percent, SARON mortgage holders have benefited from the lowest interest rate for financing residential property.
Economists are forecasting an unchanged SARON rate – 0.02 percent – until the end of 2026.
Whether a traditional fixed rate mortgage or a SARON one is best for you depends on your personal circumstances.
You can look at what is available right now here.
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Can a foreigner get mortgage in Switzerland?
The most important condition for being able to obtain a Swiss mortgage – aside from your financial standing, of course – is your residency status.
So the question should be not whether you qualify for a mortgage but, rather, if you can purchase property in Switzerland in the first place.
Logically, if you are allowed to buy a house or an apartment in Switzerland, then you can apply for a mortgage as well.
Like any Swiss citizen applying for mortgage, you will have to provide your income details. But in addition to that, you will be asked to provide other documents as well, such as your work / residency permit, for example, along with the canton’s authorisation.
