Lex UBS: What the Federal Council's decision means for mortgage holders

With its decision of April 22, 2026, the Federal Council, under the leadership of Finance Minister Karin Keller-Sutter, is implementing one of the largest banking packages in decades. The measure will be implemented in two tranches. The amendment to the Banking Act begins its parliamentary journey, while the amendment to the Capital Adequacy Ordinance is planned to come into force largely on January 1, 2027. For UBS, this means an additional capital requirement in the order of 20 billion dollars, of which, according to internal calculations, around 9 billion still effectively needs to be raised.

What the new regulation requires

At the core of the measure is the full capital backing of the foreign subsidiaries of a Swiss major bank. The Federal Council is thus directly responding to the lessons from the collapse of Credit Suisse, whose capital cushions were so widely distributed internationally that an orderly resolution in the crisis situation no longer seemed possible. UBS is required to raise its core capital ratio at the group level to about 15.5 percent after full implementation.

The transition period has been set at around seven years, giving UBS time to gradually build up the missing capital. According to the Federal Council, the annual additional capital costs add up to 320 to 560 million dollars. UBS itself expects nearly three times as much.

The official position of the Federal Council

In its official communication, the Federal Council has made it clear that Swiss lending business is not affected. The additional capital requirements will apply exclusively to foreign operations and will therefore neither affect the viability nor the availability of mortgages or SME loans in Switzerland. An increase in mortgage rates is not expected from a regulatory perspective.

This view is not undisputed. Associations such as Economiesuisse and the Swiss Bankers Association criticize the measure and warn of structural consequences for the entire Swiss economy. They point out that a bank ultimately refinances its capital costs across all business areas, even if the regulatory requirement only affects a part.

What independent economists say

A study commissioned by UBS from BAK Economics models the macroeconomic impacts through three channels. In the interest rate scenario, the economists expect additional credit margins of 0.08 to 0.33 percentage points per year. The supply scenario describes a regulatory-induced reduction of credit supply, while the location scenario refers to an erosion of Switzerland's attractiveness as a wealth management hub. In total, the study estimates the growth losses over ten years at 11 to 34 billion Swiss francs, equivalent to 1.3 to 3.9 percent of a year’s economic output.

Worth noting is the statement that regulatory-induced margin increases act structurally, not cyclically. The Swiss National Bank therefore cannot easily compensate for them through monetary policy. According to the study, how the effects will ultimately materialize can only be checked with real market data in one or two years.

The role of UBS in the Swiss mortgage market

After the takeover of Credit Suisse, UBS is by far the largest mortgage bank in Switzerland and holds around a quarter of the domestic mortgage volume of 983 billion francs, as most recently reported by the SNB for the end of 2025. Even a minor adjustment to UBS's conditions would therefore have noticeable effects on the entire market. If UBS were to increase its margins due to higher capital costs, this would also give competitors leeway to adjust their terms accordingly.

Yield properties and mortgages with high loan-to-value ratios are particularly sensitive. In these segments, banks generally respond more strongly to changes in risk and capital costs than with traditional residential mortgages with moderate loan-to-value. Increased costs would impact institutional investors as well as private investors with leveraged rental apartment buildings.

Outlook for mortgage holders

In the short term, little will change for owners and buyers. The new rules will not come into effect before 2027, and the seven-year transition period allows for a gradual adjustment. Anyone taking out or extending a mortgage in the next one to two years is likely to find conditions largely unchanged from today.

Over the medium term, careful observation will be worthwhile. Should UBS’s terms rise noticeably, competitive pressure on cantonal banks, insurers, and pension funds will decrease, potentially resulting in higher margins across the market. Those who already diversify their mortgages over several tranches and providers are better protected against such shifts than customers with monolithic contracts at a single institution.