Beyond LIBOR

What will happen once LIBOR is gone?

The use of the LIBOR rate as the reference rate for LIBOR mortgages is expected to be discontinued at the end of 2021. SARON (Swiss Average Rate Overnight) was recommended to succeed CHF LIBOR as the new reference rate for mortgages in Switzerland.

UBS is currently working on developing a successor product and plans to launch the new UBS SARON mortgage sometime in 2020.

Current UBS LIBOR mortgage clients will be notified of the switch in due course.

Key information about SARON

SARON (Swiss Average Rate Overnight) was set up in 2009 and is calculated on the basis of completed transactions and binding quotes (buy and sell prices) in the Swiss money market.

The calculation method was developed by SIX Group AG (SIX) in collaboration with the Swiss National Bank (SNB). SARON is publicly available, robust and meets the requirements of international benchmark standards. It is calculated and published each day by SIX, which operates the infrastructure for the Swiss financial market, immediately after the close of business (18:00 UTC).

UBS plans to launch the new SARON mortgage sometime in 2020.

Current UBS LIBOR mortgage clients will be notified of the switch in due course.

Yes. The current discussion about replacing LIBOR is not currently affecting UBS’s product range. New LIBOR mortgages can still be concluded.

New LIBOR mortgages contain a clause stating what will happen if the CHF LIBOR becomes unavailable as a reference interest rate before the contract expires.

The procedure for the conversion of current UBS LIBOR mortgages will be announced in due course.

As a general rule, once the new SARON mortgage has launched, clients will have an opportunity to convert all or part of their LIBOR mortgage into a SARON mortgage at the end of the fixed-interest period (that is, within 3, 6 or 12 months).

Alternatively, clients can contractually transform all or part of their LIBOR mortgage into a multi-year fixed-rate mortgage at the end of the fixed-interest period.