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SNB lowers key interest rate by 0.25%

The Swiss National Bank (SNB) is lowering its key interest rate from 0.50% to 0.25%. This was announced by the SNB at its monetary policy assessment on Thursday. This is the fifth interest rate cut in a row. The current interest rate level is now the lowest since September 2022.

The Swiss National Bank (SNB) is lowering the key interest rate from 0.50 % to 0.25 %. This is the fifth interest rate cut in a row - and the lowest level since September 2022.

How could it go on?

In view of the current uncertainties in the market – particularly with regard to geopolitical tensions, a fragile global economy and increasing discussions about the economic consequences of a continued decline in inflation – speculation about negative interest rates is once again rife in Switzerland. While the scope for further interest rate cuts appears limited, a combination of weak demand, cautious investment behaviour and low inflation could put pressure on the SNB to continue its expansionary monetary policy.

Effects on mortgages

The latest interest rate cut also has an impact on the mortgage market: while longer-term interest rates – for example for 5- or 10-year fixed-rate mortgages – have already partly priced in this move, an immediate reaction is expected for short-term maturities and SARON mortgages. Mortgage borrowers with variable or short-term financing could therefore quickly benefit from more favourable conditions, while the current level may represent an attractive entry window for long-term fixed-rate mortgages.