Tenant shock threatens in March
The reference interest rate is still at a record low level
The reference interest rate for rents has not risen, but remains at the previous record low. Since its inception, the benchmark has never increased. But the situation for tenants is likely to deteriorate very soon.
Rents are not (yet) rising. The reference interest rate remains at a record low level.
The mortgage reference interest rate is 1.25 percent and thus remains at the same level as the rate last published. This is reported by the Federal Housing Office. The reference rate, which is decisive for setting rents in Switzerland, has not increased since it was introduced. But the record low level of 1.25 percent should soon be history.
The average rate for all outstanding mortgages in Switzerland is expected to rise by 0.25 percentage points in the first half of 2023. Maybe even on the next deadline, March 1, 2023. The Zürcher Kantonalbank (ZKB) recently issued this forecast with an analysis.
Spring cost shock
If the reference interest rate rises, landlords and homeowners have the right to increase the rent by 3 percent on the next termination date.
Quite a few tenants have to adjust to an increase in their rent. According to the ZKB, half of rented households can expect a hefty rent increase in the next five years. It is said that rents are likely to rise by around 15 percent by 2027 due to the interest rate.
The reference interest rate was introduced in autumn 2008. It replaced the prevailing interest rates for variable mortgages in individual cantons at the time. When it was introduced in 2008, the reference rate was still 3.5 percent, after which it gradually fell. And it hasn’t changed since it fell to 1.25 percent in March 2020.