Interest rates being quoted on mortgages in Switzerland have fallen to a three-year low, a new study from Moneypark has revealed. Some experts have gone on to predict that negative interest rates may be on the cards next year.

Average interest rates on Swiss mortgage plummet in 2024

The report noted that following a 0,5 percentage point drop in the third quarter of 2024, interest rates have fallen by a further 0,3 percentage points since the end of September. As a result, those looking to buy a house in Switzerland will benefit from the lowest rates seen in the alpine nation since 2021.

According to Moneypark, interest rates for a 10-year fixed rate mortgage have fallen to an average of 1,13 percent, dropping to 0,91 percent for five-year plans. Variable rate and Saron mortgages remain higher at between 1,6 and 2,35 percent. “We should therefore return to the ultra-low interest rate situation that we had already experienced between 2016 and the end of 2021 just before Christmas," Moneypark noted.

The recent decline has been attributed to the Swiss National Bank (SNB). Faced with inflation below 1 percent, the SNB cut its policy rate from 1,75 to 1,50 in March 2024, to 1,25 percent in June and again to 1 percent at the end of September. Moneypark expects the rate to be cut by a further 0,25 percentage points on December 12.

Negative interest rates on the horizon for 2025

What’s more, Swiss banks and mortgage companies are likely to cut mortgage costs even further, with Moneypark noting that providers are yet to pass the full benefit of the lower rates onto customers. "We should therefore soon see even more attractive conditions emerge."

Looking ahead, Moneypark predicts that interest rates on mortgages will remain “ultra-low” throughout 2025, though political and economic developments in the United States and European Union do remain a source of concern. The report concluded that we may even see the return of negative interest rates in 2025 - when banks and providers pay homeowners interest for holding mortgages.

Buying a house in Switzerland remains a pipe dream for many

Though the news will be positive for those with the salaries and financial muscle to buy their own home, record housing shortages and high purchasing costs continue to price many out. A November 2023 study from Wüest Partner found that as of 2021, only around 36 percent of the population own a home.

They found that nationally, homes in Switzerland are an average of 9 percent too expensive for a working couple to buy - in places like Zug and Geneva, this rises to 49 percent. In fact, as of the end of 2023, only seven Swiss cantons offer homes which are affordable for average earners.

However, the low interest rates will bring some good news for those renting a house or apartment in Switzerland. The lower rates will make a drop in the reference interest rate on Swiss mortgages a near certainty in 2025, which will enable most tenants to apply for a rent reduction.