Reference interest rate remains at 1.75 percent Tenants have one less thing to worry about

Tenants in Switzerland can breathe a sigh of relief. The reference interest rate for residential rents remains at the current level. This means that existing rents remain unchanged.

The Federal Housing Office (BWO) is leaving the mortgage reference interest rate at 1.75 percent, as it wrote in a press release on Monday. This means that the phase of increases for existing tenancies is definitely over.

Last year, the reference interest rate climbed in two steps from 1.25 to 1.75 percent and has remained at this level ever since. Some landlords used the increases as an opportunity to raise rents significantly - in some cases by more than 10 percent.

Average value unchanged

To determine the reference interest rate, the BWO relies on the quarterly average interest rate for domestic mortgage loans from Swiss banks. According to the BWO, this has fallen to 1.67% compared to the previous quarter (1.72%).

The reference interest rate is rounded up or down to the nearest quarter of a percent. This means that instead of a further increase, a reduction soon seems possible again. This would take place at an average interest rate of 1.625 percent.

Experts expect stability

Experts had not expected a change in the reference interest rate in advance. This is because mortgage interest rates, on the basis of which the reference interest rate is calculated, had recently eased. This was due to falling inflation rates and two interest rate cuts by the Swiss National Bank.

Experts from the major bank UBS therefore recently concluded in a study that no change in the reference interest rate is to be expected in the next assessments of the situation. Ultimately, however, this also depends on the further development of monetary policy.

In principle, landlords are allowed to increase the rent by 3.0 percent if the reference interest rate rises by 0.25 percentage points - provided they have passed on previous reductions. They are also allowed to pass on 40 percent of the accumulated inflation and "general cost increases".

Conversely, if the reference interest rate is lowered, tenants are also entitled to a rent reduction - always depending on the interest rate on which the current rent is actually based. Tenants can also request a rent reduction in writing if the landlord does not do so of their own accord.

The mortgage reference interest rate will next be published on December 2.

SDA