Current economic outlook

Status as at: 26.09.2024
Editorial deadline: 26.09.2024

As part of its monetary policy assessment at the end of September, the SNB has decided to reduce the policy rate  Policy rates are interest rates set by central banks and are key monetary policy instruments. Policy rates determine the interest rate at which commercial banks can borrow liquidity from central banks. As a result, most short-term interest rates in an economy fluctuate with policy rates. to 1.0 percent. The attractiveness of SARON mortgages has risen again as a result. For the SNB, this was the third relaxation to monetary policy in a row. These measures can primarily be understood as a reaction to the changing international environment. Both the US Federal Reserve and the European Central Bank have begun their interest rate reduction cycles and are likely to continue pursuing these in the next 12 months. Under these circumstances, the SNB will probably be anxious to avoid excessive upward pressure on the Swiss franc.

At the same time, the interest rate reduction reflects the persistent weakness of the Swiss economy  The economy refers to a country’s current economic situation and reflects changes and fluctuations in economic activity. Sooner or later, upturns are followed by downturns, which is known as an economic cycle. A strong economy means good economic performance and vice versa. . The sluggish performance of domestically oriented economic sectors has contributed to a further fall in inflation  Inflation is the sustained rise in the general price level for goods and services in an economy over a particular period of time. When the price level rises, the purchasing power of money falls, i.e. fewer goods and services can be bought with the same amount of money as before. , creating the scope to relax monetary policy. By cutting interest rates, the SNB is also pursuing the goal of restimulating domestic demand and investment activity in particular.

Unlike SARON mortgages, however, the positive effects on fixed-rate mortgages are likely to be limited. Long-term capital market interest rates  Capital market interest rates have a term of over one year. They play a decisive role in the cost of long-term financing. are already exceptionally low, with expectations of further significant relaxation measures by the SNB already factored in. We do not believe that this level appears sustainable over the long term, primarily because the SNB is likely to want to avoid a return to zero interest rates.

Interest rate forecast for PostFinance mortgages

We expect mortgage interest rates to fall slightly in the next three months. During the coming year, we anticipate a further interest rate cut by the SNB and therefore lower SARON rates due to the predicted relaxation of monetary policy by the major central banks. A gradual recovery of the Swiss economy could again lead to a slight rise in interest rates for fixed-rate mortgages during this period.

Development of mortgage rates in Switzerland

Following the tightening of monetary policy and the increase in inflation rates after the COVID-19 crisis, interest rates and therefore costs for medium- and long-term fixed-rate mortgages in Switzerland rose considerably, reaching their highest level for more than 10 years in spring 2023. Since then, however, interest rates have been falling. In particular, the turnaround in monetary policy in March this year was met with further falls in interest rates on the capital market and, in turn, for medium- and long-term fixed-rate mortgages. The costs for these mortgages are now significantly lower once again, although they remain higher than they were before monetary policy was tightened in spring 2022. Despite a possible further fall in money market interest rates in the next year, we expect that long-term interest rates and therefore the costs for fixed-rate mortgages may rise again slightly due to the gradual recovery of the Swiss economy.

A Saron or fixed-rate mortgage

The PF attractiveness index continues its sideways trend, signalling that money market financing  Money market financing is available for a term of up to a year. is increasingly able to compete with fixed-rate mortgages again. The SNB’s policy rate cuts – of which there have now been three this year – have made money market financing considerably more attractive. Fixed-rate mortgages are still more attractive than money market financing options due to historically low capital market interest rates. However, this situation could change in the next 12 months. Firstly, we anticipate a further policy rate cut in spring. And secondly, we expect fixed-rate mortgages to become slightly more expensive over the course of the next year. 

Interest rate forecast for download