Housing: Reference interest rate remains at 1.75 percent
The mortgage reference rate will remain at 1.75 percent in the new year, the Federal Office of Housing reports. However, a reduction to 1.5 percent was only narrowly missed.
The average interest rate, which was determined by the Federal Office of Housing (BWO) with a cut-off date of December 31, 2016, fell from 1.67 to 1.64 percent compared with the previous quarter. This means that the reference interest rate relevant under rental law remains at 1.75 percent, rounded in accordance with commercial practice, according to the BWO. However, this is only just: With an average interest rate of 1.63 percent, the reference interest rate would have fallen to 1.5 percent.
Since the reference interest rate has not changed compared to the previous quarter, there is also no new claim for a reduction or increase since the last announcement, according to the BWO. A reduction claim for tenants only exists in the individual lease if the rent is not based on the current reference interest rate of 1.75 percent.
Since September 10, 2008, a uniform mortgage reference interest rate has been used throughout Switzerland to determine rents. This replaced the interest rate for variable mortgages that used to apply in the individual cantons.
Since its introduction, the reference interest rate has never risen. In 2008, it was still at 3.5 percent, after which it continued to fall. Since June 2015, the reference interest rate has been 1.75 percent. It is generally expected to fall to 1.5 percent on June 1, 2017, because average mortgage interest rates are also continuing to fall and a reversal of the trend is not currently foreseeable.
