Federal Housing Office
bern, December 2, 2024 – The reference mortgage interest rate is 1.75 percent and is therefore still at the same level as the last published rate. It concerns the determination of rent throughout Switzerland.
The reference interest rate is published in a quarter of a percent. It is based on the volume weighted average interest rate of home mortgage claims. The average interest rate determined as of September 30, 2024 fell from 1.67 percent to 1.63 percent compared to the previous quarter. The reference interest rate applicable under the rent law is commercially sound and therefore remains at 1.75 percent and applies from December 3, 2024. It remains at this level until the average interest rate falls below 1.63 per cent or it will rise to over 1.87 per cent.
The reference interest rate is equal to 1.75 percent from december 2, 2023. As it has not changed compared to the previous quarter, there is no new entitlement to a reduction or increase since the last proclamation.
If the rent is still based on a reference interest rate of 2.00 per cent or higher, you are still entitled to a reduction. If the rent is based on a reference interest rate of 1.5 per cent or lower, the landlord is generally entitled under tenancy law to increase the rent by 3 per cent per quarter of a percentage point. Most of the time, the rental agreement or the final rent adjustment notice provides details about the reference interest rate level on which the current rent is based. Rental agreements with indexed or graduated rents as well as rents based on sales for business premises are excluded from these rules. Special regulations often apply to subsidized apartments.
Other factors can contribute to a rent increase
As well as the change in the reference interest rate,other cost factors such as the change in the national consumer price index (inflation) can play a role in determining rent. The price increase can be offset by up to 40 percent.In addition, a change in maintenance and operating costs may result in an adjustment to the rent. This may need to be factored into the calculation.
The BWO announces the mortgage reference interest rate and the average basic interest rate quarterly at www.referenzzinssatz.admin.ch. The public will be notified with a media release, the next one is scheduled for March 3, 2025.
Since 10 September 2008, rental rates throughout Switzerland have been based on the uniform reference mortgage interest rate. This replaced the interest rate for variable mortgages that was previously applicable in the individual cantons. article 12 is the legal basisa the residential and Business Premises Rent and Lease Order (VMWG).
Address for inquiries
Media and Communications BWO, media@bwo.admin.ch, Tel
editor
How can renters in Switzerland negotiate their rental agreements based on changing mortgage reference rates?
Time.news Interview: Understanding Switzerland’s Mortgage Reference Rate with Dr.Elise Schmitt, Economic Expert
Time.news Editor (TNE): Good day, our readers! Today, we have an esteemed guest, Dr. Elise Schmitt, an expert in economic trends and housing regulations. Welcome, Dr.Schmitt!
Dr. Elise Schmitt (ES): Thank you for having me! It’s a pleasure to be here.
TNE: Let’s dive right into the topic. The recent update from the Federal Housing Office states that the reference mortgage interest rate is holding steady at 1.75 percent. How significant is this rate in the context of the Swiss housing market?
ES: It’s quite significant! the reference mortgage interest rate serves as a benchmark for determining rent across Switzerland. A stable interest rate means that renters and landlords can expect some continuity, which is crucial in a market that often wrestles with fluctuations in costs.
TNE: The article mentioned that the average interest rate on home mortgage claims has actually decreased from 1.67 percent to 1.63 percent. Yet, the reference rate remains unchanged. Why does that happen?
ES: Great question! The reference interest rate is set based on the volume weighted average of mortgage claims, but it has specific thresholds that need to be met for any adjustments.In this case, as the average interest rate has to drop below 1.63 percent or rise above 1.87 percent for a change to occur, we are currently in a holding pattern.It allows for stability in financing for landlords and renters alike.
TNE: Speaking of stability, how do you think this affects renters who are still connected to older higher reference rates, say 2.00 percent or more?
ES: Renters with a reference rate of 2.00 percent or higher have an entitlement to a reduction. This scenario creates an interesting dynamic: while the overall reference rate remains consistent, individual cases could still see reductions, providing relief for many tenants.It highlights the importance of awareness among renters regarding their rental agreements.
TNE: If someone is currently renting based on that older rate, what would be their next steps?
ES: They should definitely review their rental terms.If their basis is indeed 2.00 percent or higher, they should engage with their landlord to discuss potential adjustments. It’s also wise to keep tabs on any changes to the reference rate going forward, as future fluctuations could open up new possibilities for rent reductions.
TNE: What do you foresee for the housing market in Switzerland in the upcoming months, considering these rates?
ES: Well, if the rates continue to hold steady, it may lend some stability to the housing market, allowing both landlords and renters to plan better. Though, any changes in economic conditions or interest rates from global influences could lead to adjustments. So, itS essential for both parties to remain adaptable.
TNE: Dr. Schmitt, your insights have been immensely helpful today! Any final words for our audience regarding mortgage rates and housing stability?
ES: absolutely. Staying informed is key! Weather you’re a renter or a landlord, understanding how these interest rates affect your situation can empower you to make better decisions.Keeping an eye on these changes ensures you’re not left behind in an evolving market.
TNE: thank you once again, Dr. Schmitt, for shedding light on this important topic.We appreciate your time!
ES: Thank you! It was my pleasure.