Interest rate forecast

Mortgage interest rates and government bond yields moved sideways again in September. The surprising decision by the Swiss National Bank (SNB) to keep key interest rates at 1.75 percent in September did nothing to change this.

The SNB justified its decision not to raise interest rates by citing economic risks for the Swiss economy and the fact that the interest rate hikes of recent quarters had not yet demonstrated their full effect. It gave these arguments more weighting than inflation risks and the European Central Bank’s latest interest rate hike.

This is likely to mark the end of the SNB’s cycle of interest rate hikes. The impact on longer-term interest rates is obvious. Even before the monetary policy assessment, it was clear that interest rate hikes were likely to end soon and that interest rate cuts would become an issue in 2024.

The expectation of key interest rate cuts in 2024 should lead to slightly lower interest rates in the coming quarters. The potential for government bond yields is limited, as they are already highly valued. The decline in mortgage interest rates is likely to be more pronounced. Mortgage interest rates linked to the SARON are expected to remain stable.

(Status as per 22 September 2023)

Graphic instructions
Select individual interest rates to compare them and check their development by following the respective line with your cursor. 

Sources: Bloomberg, UBS Switzerland AG
Rates through the end of 2010 are based on Libor, and on SARON from 2011. The effective interest rate of the product is calculated using the margin + compounded SARON of the accounting period. When calculating the interest rate, the compounded SARON can never be less than zero.

Sources: Bloomberg,UBS Switzerland AG
Please note that the stated interest rate is in part a forecast and the actual interest may be higher or lower.