Housing: Reference rate falls to 1.25%
The mortgage reference rate, which applies throughout Switzerland for rent setting, has fallen from 1.5% to a new 1.25%.
The reference rate is based on the quarterly volume-weighted average interest rate of domestic mortgages. This average interest rate, calculated with a cut-off date of 31 December 2019, fell to 1.37% from 1.39% in the previous quarter, according to a statement from the Federal Housing Office (FHA).
The reference interest rate for rental purposes is therefore 1.25%, rounded to the nearest whole number, and will apply from 3 March 2020, the BWO said. It will remain at this level until the average interest rate falls below 1.13% or rises above 1.37%.
Due to the lower interest rate, tenants are in principle entitled to have their rent reduced by 2.91% if it was adjusted at the time of the last reduction. However, if the rent is still based on a higher reference interest rate than 1.5%, a larger rent reduction will result.
The mortgage reference rate and the underlying average interest rate are published quarterly by the BWO. The next publication will take place at the beginning of June. (ah)
