SNB remains at zero, but the interest rate turnaround is likely to come in 2027: What this means for your mortgage

The Swiss National Bank is keeping the key interest rate at 0.00 percent. It is the fifth rate pause in a row. The decision was expected and appears at first glance to be a non-event. More revealing is what the SNB has changed in its communication. It is raising the inflation forecast across the entire horizon. It is sharply correcting the growth outlook for 2026 upwards. And for the first time since March, it is dispensing with the wording of an “increased” willingness to intervene in the foreign exchange market.

The decision in detail

Inflation has risen from 0.6 percent in May to 0.8 percent in August since the last situation assessment. The main drivers are higher oil prices. In August, goods inflation turned positive for the first time since May 2024. In the medium term, inflationary pressure has only increased slightly, the SNB writes.

The new conditional inflation forecast is noticeably higher than in June. For 2026, the National Bank expects an average of 0.7 percent, and for 2027 and 2028, 0.8 percent each. In June it was still 0.6, 0.6 and 0.7 percent. In the short term, the SNB expects a rise to 1.2 percent in the fourth quarter of 2026 and the first quarter of 2027. After that, inflation should fall again as energy prices ease and pick up slightly toward the end of the forecast horizon. The SNB justifies the higher medium-term forecast, among other things, with the weakening of the franc. The forecast remains within the target range of 0 to 2 percent throughout the entire period.

The economic outlook has changed significantly. GDP grew exceptionally strongly in the second quarter. The SNB attributes this partly to the chemical-pharmaceutical industry, but also describes the underlying growth as solid and broadly supported. For 2026, it now expects growth between 1.5 and 2 percent. In June, the forecast was around 1 percent. For 2027, it remains unchanged at around 1.5 percent.

The quiet signal on the foreign exchange market

The most important change is in a single sentence. Since March, the SNB had spoken of an “increased willingness” to intervene in the foreign exchange market. Before that, it was always stated that it would be active on the foreign exchange market if needed. Now, the National Bank is only “ready if necessary” to be active in the FX market to ensure appropriate monetary conditions. The reference to a threatening excessive appreciation of the franc is missing.

With this, the SNB returns to the language used before the Middle East escalation. The reason is obvious. The franc has weakened, and the SNB itself cites this weakening as support for the economy and as part of the reason for the higher inflation forecast. A central bank warning of an overly strong franc does not raise interest rates. A central bank withdrawing this warning gives itself room to maneuver.

Alone among rate hikers

The SNB is now the only major central bank sticking to zero interest rates. It notes itself that key rates in the eurozone and the USA have been raised. The ECB increased the deposit rate to 2.50 percent on September 10, and the Fed raised its target range to 3.75 to 4.00 percent on September 16. This widens the interest rate differential to abroad. That takes pressure off the franc and supports the SNB’s course.

What economists expect

Economists were in agreement in advance regarding the key interest rate itself. However, opinions differ regarding the further path. According to UBS, the markets have significantly raised their expectations: At the end of August, around 25 basis points of rate hikes were priced in by June 2027, but by mid-September, it was already around 60 basis points. UBS expects the first rate hike in June 2027, BAK Economics as early as December 2026.

Raiffeisen chief economist Fredy Hasenmaile does not expect any further rate hikes this year but sees a window of opportunity for the normalization of monetary policy. The Zürcher Kantonalbank argues similarly. It assumes that the key interest rate will be at 0 percent at the end of 2026, but also considers the possibility of a window for higher rates.

Today's signals fit with this reading. A higher inflation forecast under the assumption of a zero key interest rate, stronger growth, and a softened foreign exchange market formulation all speak in favor of the next step being upwards rather than downwards. The topic of negative interest rates is off the table.

What does this mean for mortgage holders?

For those with variable financing, nothing will change for now. The SARON was at minus 0.04 percent this morning, and the cheapest SARON mortgage in the hypothek.ch comparison was at 0.90 percent. As long as the key interest rate remains at zero, SARON mortgages will remain inexpensive. The question is no longer if rates will rise, but when. A first step of 25 basis points would increase the annual interest burden on an 800,000 franc SARON mortgage by about 2,000 francs.

At the long end, part of the normalization has already been priced in. The five-year CHF swap was at 0.6875 percent this morning, the ten-year at 0.8075 percent and the fifteen-year at 0.8950 percent. The cheapest ten-year fixed-rate mortgage in the comparison cost 1.70 percent. Fixed-rate mortgages have already become more expensive in recent weeks, driven by higher rates abroad and rising rate expectations at home. Anyone planning to refinance in the next twelve to eighteen months should therefore follow the development of the swap curve closely. Early closing provides security but requires accepting a possible markup.

Conclusion

The SNB is keeping quiet, but is visibly leaving crisis mode. The warning about an overly strong franc has disappeared, the inflation forecast is rising, growth is positive. Zero interest rates remain for the time being, but their expiry date is drawing nearer. For SARON debtors, the environment remains attractive for now. But the risk floats along that for a SARON mortgage you may have to pay more in the course of 2027. This risk currently has to be consciously accepted. For anyone wishing to fix and secure their mortgage for the long term, the market has already partially anticipated the interest rate turnaround. It may still be attractive to fix the mortgage by means of a fixed-rate mortgage. The next assessment will take place on December 10, 2026.

Sources

• Swiss National Bank: Monetary policy assessment of September 24, 2026
• Swiss National Bank: Monetary policy assessment of June 18, 2026
• watson / Keystone-SDA: SNB keeps key interest rate at zero percent (June 18, 2026)
• investrends.ch: SNB ahead of rate decision: When will rates rise here as well?
• Blick: Is Martin Schlegel now turning the interest rate screw?
• Zürcher Kantonalbank: Interest rate forecasts
• hypothek.ch: Current mortgage rates and swap rates