Raiffeisen considers SNB zero interest outdated: Signal for mortgage borrowers

Raiffeisen’s October forecast at a glance

In its current interest rate forecast from 1 October 2026, Raiffeisen describes the ongoing SNB key interest rate of 0 percent as increasingly inappropriate. The wording is remarkably clear. According to the St. Gallen bank, the Swiss economy is moving close to its potential path, inflation is again within the target range of 0 to 2 percent, and the second wave of recession worries from the spring has largely subsided. Against this background, a supportive zero interest policy is hardly justifiable economically.

In its base scenario, Raiffeisen does not expect a significant further increase in the cost of long-term fixed-rate mortgages. Conditions have already risen moderately and should only develop moderately further with limited interest rate adjustments. However, the likelihood of an initial SNB interest rate move has increased in the medium term. The window of opportunity for a rate hike could open as early as the assessment in December, provided the economic recovery solidifies and there is no sudden easing of energy prices.

What an SNB adjustment means for the SARON mortgage

The SARON moves almost in sync with the key interest rate. If the National Bank changes the rate by 25 basis points, the compounded SARON shifts in the same direction within a few weeks. For mortgage borrowers, this means: Every SNB rate hike directly increases the ongoing interest costs of an existing SARON mortgage. For a mortgage of 500,000 francs, a rate move of 0.25 percentage points translates into an additional annual burden of around 1,250 francs; for 1 million francs it is 2,500 francs.

Currently, SARON products are, depending on the bank and margin, just above 1 percent, while ten-year fixed-rate mortgages cost around 2 percent. This difference of about one percentage point makes the SARON mortgage mathematically the cheaper option for many financings. But the math changes quickly if the SNB changes its course. Just two rate increases of 25 basis points each would lift SARON mortgages to a level where the interest advantage over a five-year fixed-rate loan largely disappears.

When switching to a fixed-rate mortgage pays off

A simple rule of thumb: SARON is worthwhile as long as the sum of today’s rate and expected rate changes over the planned holding period remains below the current fixed rate. If you currently have a SARON mortgage at 1.1 percent and expect two rate hikes in the next two years, the average comes to around 1.4 to 1.5 percent. A five-year fixed-rate mortgage at 1.8 percent would still be more expensive in this scenario mathematically, but offers planning security.

The decision also depends on your personal life situation. Mortgage borrowers with tight affordability, a planned retirement, or a divorce in preparation have a greater interest in fixed costs. Households with solid income surpluses and financial reserves can generally withstand SARON rate fluctuations. For them, the money market mortgage remains attractive even in the event of an SNB move, especially since the yield curve has remained flat over the course of 2026.

Breakeven scenario: At what SNB rate does SARON become more expensive

The breakeven calculation is straightforward. If the bank-specific SARON margin remains constant and the key interest rate rises from today’s 0 percent to 0.75 percent, the compounded SARON moves towards 1.75 to 1.85 percent. This level is already very close to the current terms for five- to ten-year fixed-rate mortgages. No later than at an SNB rate of 1 percent, the ratio flips: SARON then becomes more expensive than a medium-term fixed-rate mortgage in most cases.

Crucially, Raiffeisen does not see such a development as the main scenario over the next twelve months. The bank expects a gradual exit from the zero interest rate policy, not an abrupt rate shock. This gives mortgage borrowers time to review their own financing structure, obtain offers, and switch to fixed-rate mortgages in stages if necessary.

Alternative scenario and market prices

Not all market participants share Raiffeisen’s view. Some economists consider an initial rate hike realistic only in 2027, especially if the franc appreciates significantly or international economic risks increase. The futures markets are currently pricing in a gradual normalization, but with significantly lower final rates than in previous interest rate cycles. For mortgage planning, this results in a broader corridor of expectations, favoring conservative financing.

For buyers close to signing contracts, interest rate hedging via a forward mortgage remains relevant. The markups compared to the spot price have increased in recent months but remain acceptable if the interest rate level actually rises by the time of financing, in twelve or twenty-four months.

What mortgage borrowers should check now

Anyone with an ongoing SARON mortgage should first study the contract conditions carefully. The key points are the switch clause to a fixed-rate mortgage at your own bank, its term, and the market premium. At the same time, it’s worth comparing the market: For larger financings, the conditions for five- and ten-year fixed-rate mortgages often differ by 20 to 40 basis points between the cheapest and most expensive providers.

For buyers in the financing phase, the central question remains how much interest rate security their budget requires. The answer depends less on a single bank’s forecast and more on their own risk tolerance, time horizon, and the ratio between mortgage and household budget. Raiffeisen’s October assessment provides a valuable data point for this. However, it does not replace individual planning.