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The reference interest rate for rent remains at 1.25 percent

The reference interest rate for rents remains the same for the time being – but that could change soon.

Simon Tanner / NZZ

no. The mortgage reference interest rate for residential rents remains unchanged at 1.25 percent. This was announced by the Federal Housing Office (BWO) on Thursday. This means that this interest rate, which applies to rent arrangements throughout Switzerland, remains at a low level despite the general rise in interest rates.

The reference interest rate has been 1.25 percent since March 2020. When it was introduced in 2008, it was still 3.5 percent, after which it gradually fell. Every 0.25 percentage point increase in the reference interest rate gives the landlord the right to increase the net rent by 2.91 percent.

Because if mortgage interest rates rise, landlords can pass on the additional financing costs to tenants. The mortgage reference interest rate serves as a benchmark for this. It is based on the average rate of all outstanding mortgages. According to the announcement at the end of September, this rose only slightly from 1.17 percent in June to 1.18 percent.

According to the BWO, an increase in the reference interest rate is only necessary if the average rate calculated by the Swiss National Bank (SNB) rises to over 1.37 percent. The next publication of the reference rate is planned for early March 2023.

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