SARON Mortgages

The SARON (Swiss Average Rate Overnight) has existed since 2009 and is calculated daily 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 Ltd (SIX) in association with the Swiss National Bank (SNB). The SARON is publicly visible, transparent and is calcu­lated and published by SIX daily after the close of trading. SIX, which maintains the infrastructure for the Swiss financial center, calculates and publishes the rate each day immediately after close of trade (6:00 p.m. UTC).

SARON is an overnight rate that is valid for the interest rate period of the current day until the following morning.

To prevent you as a client from having to pay interest every day, we’ll still be offering three-month interest rate calculation periods. SIX (the benchmark administrator) offers the Compounded SARON reference interest rate to determine the interest rate to be paid at the end of a calculation period. This rate is derived for a given period from the average of the daily-compounded SARON interest rates.

For SARON Mortgages, this means that the interest rate and thus the interest payment to be made are determined on the penultimate day of the interest period.

The method for calculating the Compounded SARON can be accessed on the SIX website (link) and run at any time (link). Select a start and end date for the calculation.

The SARON Mortgages have an indefinite term and can be taken out at any time. It has an indefinite term and can be taken out at any time. The client interest rate is made up of the retrospective Compounded SARON plus an agreed fixed customer margin. The interest period is three months. The interest rate and hence the amount of interest to be paid are determined on the penultimate day of the interest period.

¹ When calculating the client interest rate, the Compounded SARON can never be less than zero.
For illustrative purposes only.

The SARON Mortgage closely tracks changes in the money market. This is welcome in times of falling interest rates, but not desirable when rates are rising. You can protect yourself against rising interest rates by converting some or all of the SARON Mortgage into a multi-year fixed-rate mortgage. With a fixed-rate mortgage, you set the interest rate for the entire term of the mortgage.

By combining several mortgages with different terms, you minimize the risk of having to renew the entire mortgage all at once if interest rates change unfavorably.

We recommend regularly reviewing your mortgage strategy with your client advisor.

SARON Flex Mortgage

Benefit from additional flexibility options with the UBS SARON Flex mortgage

Termination: Termination period of 1 month
                      10 days if the property is sold
Repayment: Option of an extraordinary reduction of the loan amount once per
                     calendar quarter free of charge