Zero rate stays, December draws closer: how to protect your mortgage against the next rate move

What the National Bank decided

The SNB held the policy rate unchanged at 0 percent. It justified the decision with inflation that remains within the target range of 0 to 2 percent and a robust economy: Swiss output grew strongly in the second quarter. At the same time, the environment has changed. According to media reports, the European Central Bank and the US Federal Reserve have recently raised their policy rates by 0.25 percentage points each, the franc has lost value against the euro and the dollar, and energy prices are pushing up inflation. The interest rate gap between Switzerland and other countries is therefore widening – something that, experience shows, keeps the National Bank busy.

Why the market is nevertheless looking to December

Several market observers believe the SNB could act by December. According to a media report, one asset manager expects the first rate step at year-end, and market pricing points to more than two increases by mid-2027. Other institutions maintain that the policy rate is still likely to be at 0 percent at the end of 2026. Both are assessments, not certainties. For homeowners, the decisive question is therefore less who turns out to be right and more how robust their own financing is against either outcome.

What this means for fixed-rate and SARON mortgages

Current conditions reflect the uncertainty. According to a comparison portal, fixed-rate mortgages currently start at about 1.42 percent for five years, about 1.50 percent for ten years and about 1.74 percent for fifteen years, with a slightly rising trend. The SARON mortgage follows the overnight rate, which is currently just below zero, plus a margin that varies from roughly 0.8 to 1.3 percent depending on the lender and loan-to-value ratio. As long as the policy rate stays at zero, the SARON mortgage is inexpensive. As soon as it rises, every step passes through to interest costs almost immediately.

A fixed-rate mortgage removes that risk, but it usually costs a premium and it ties you in. Anyone who has to exit early, for example because of a sale, risks an early repayment penalty. Neither option is better in itself; they answer different questions. The SARON mortgage suits households with reserves and a willingness to tolerate fluctuations. The fixed-rate mortgage suits households that value planning certainty more than the last bit of interest advantage.

Spreading interest rate risk instead of betting

An approach that is frequently mentioned is staggering: instead of placing the entire mortgage amount on a single term, it is divided into several tranches with different maturities. One provider cites, as an example, a split into two tranches, roughly half on five and half on ten years. Combinations of a fixed-rate mortgage and a SARON portion are also conceivable. The advantage: you do not have to renew the entire amount at the worst possible moment at the conditions then prevailing. The drawback: several terms mean more administration and several maturity dates that must be kept in view.

What matters is that the structure fits your own situation. Anyone who wants to sell or renovate in a few years needs flexibility. Anyone expecting lower income in retirement should test affordability at higher interest rates as well. For this purpose, banks famously calculate with a notional interest rate that is well above current market rates. A mortgage that looks comfortably affordable today should also hold up under these stricter assumptions.

What you can prepare now

Three steps make sense regardless of the December decision. First, check when each tranche of your mortgage expires. Many banks accept extensions and early commitments twelve or even eighteen months before expiry; whether and on what terms this is possible in your case is something your institution can tell you. Second, calculate with scenarios instead of a single figure – for instance, interest costs at today’s level, at one percentage point higher and at two percentage points higher. Third, obtain several offers and compare not just the interest rate but also terms, termination options and side conditions such as amortisation requirements.

Retirement provision also plays a role. Anyone who amortises indirectly through the third pillar experiences a different effect on their tax bill when interest rates rise than with direct amortisation. Whether this pays off depends on individual tax circumstances and the canton of residence and can only be assessed case by case. It should also be borne in mind that the reform of the imputed rental value from 2029 will change the tax value of debt interest. Your mortgage strategy should therefore take into account not only the interest rate environment but also the expected tax development.

Nobody can reliably predict the timing or scale of future rate steps. Being prepared means having an answer to several possible paths.