On September 21, 2023, the Swiss National Bank (SNB) surprised experts and financial observers by announcing that there would be no increase in the base interest rate, which was confirmed at 1.75%.

However, in the accompanying statement, the SNB specified that "it cannot be ruled out that further tightening may be necessary to ensure price stability in the medium term."

A different fate befell Norway, where the increase in the base interest rate to 4.25% was confirmed (as expected by analysts), and the European Union, where the ECB raised the rate to 4.50%.

In the same period, the Federal Reserve Bank decided to maintain the rate at 5.25-5.50% in the United States.

How to interpret the SNB's decision?

The central bank chose to adopt a cautious stance and opted for stability.

It's the first time, after five consecutive increases since June 16, 2022, that the SNB has decided not to proceed with interest rate hikes.

The decision reflects a cautious approach to the current economic context and the desire to maintain financial stability and support the country's economic growth.

The downward revision of economic growth forecasts for the next year by experts (from 1.5% to 1.2%) and the ongoing reduction in inflation, due to the decrease in the prices of goods and services, which stood at 1.6% in August (within the target range of 0 to 2%), may have contributed to the decision not to intervene.

However, the Swiss National Bank continues to closely monitor the performance of the national and international economies and, as mentioned earlier, remains ready to act based on economic and market developments.

An intervention in the coming months is not ruled out.

What are the consequences for the real estate market?

The announcement on September 21 directly affects the costs of mortgages, loans, and overall financial stability, and as a result, it has been well received by property owners, tenants, and businesses.

The effects of this decision, however, vary depending on the type of mortgage that property owners have already taken out or intend to take out.

The rate increases in previous quarters resulted, for the first time in years of stability, in an increase in SARON mortgage interest rates, while the recent decision of the central bank to keep interest rates stable can have benefits for those who have fixed-rate mortgages.

Today, more than ever, the support of a consultant or a real estate agency is crucial: what may initially seem like an advantageous offer may not be the best choice for your specific case.

When it comes to financing or refinancing a home, there are multiple factors to consider, not just the current interest rate.

The choice of the optimal mortgage financing depends on individual factors and should be guided by personal financial situations, long-term goals, and risk tolerance.

Therefore, professional advice can help navigate the various available options and make an informed decision based on your financial needs and market conditions.

In Switzerland, the demand for real estate, although slightly decreased, continues to exceed supply, making the real estate market highly attractive.

Property prices are constantly rising: +1.2% in the second quarter of 2023, +2.4% compared to the same quarter of the previous year (Source: Swiss Residential Property Price Index in the second quarter of 2023, Federal Statistical Office).

This makes the situation particularly favorable for those who already own a property and are thinking of selling it because it could be the right time to witness an increase in the value of their home.

Are you thinking of selling and curious to know how much your house is worth?

Contact us for a free consultation; by performing a quick assessment in less than 3 minutes, you can get the real value of your home in the Swiss real estate market.

What are you waiting for? Discover the actual value of your property!

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