Interest Rates in Switzerland : 2025 Outlook

Introduction

In 2025, the Swiss real estate market is set to operate within a context of economic stabilization. The Swiss National Bank (SNB) plans to maintain its key interest rate at 0.5% or possibly lower it to 0.25%, depending on global economic conditions. This decision aims to ensure price stability, with inflation projected to remain below 0.5%.

This environment presents promising opportunities:

• Mortgage rates will remain stable or decrease slightly.

• Real estate investors will benefit from advantageous financing for new projects.

• Property developers can capitalize on growing demand for affordable and high-quality housing.

1. Interest Rate Forecasts for 2025

The SNB is expected to pursue a stable monetary policy, maintaining a key interest rate of 0.5%, or lowering it to 0.25% if global growth shows signs of slowing.

Expected Impact:

• Limited inflationary pressure (forecast: 0.3%) will allow the SNB to keep rates low.

• Yields on Swiss bonds will remain near 0, influencing fixed and variable mortgage rates.

• SARON-based mortgages could reach a low of 0.25%, offering appealing opportunities for buyers.

2. Predicted Trends in Mortgage Rates

Mortgage rates are expected to remain historically low in 2025, favoring homeowners and investors alike.

SARON Mortgages

• Forecast: SARON rate stabilized at 0.25%.

• Advantage: Flexibility and reduced costs for borrowers who can manage rate fluctuations.

Fixed-Rate Mortgages

• 3-year rate: Stable at 1.06%.

• 5-year rate: Forecasted at 1.12%.

• 10-year rate: Stable at 1.26%.

• 15-year rate: Forecasted at 1.53%.

Stable or slightly declining rates favor long-term projects, particularly for first-time buyers or investors looking to secure financing.

3. Outlook for the Real Estate Market

In 2025, several favorable trends will benefit the Swiss real estate market:

Property Prices

• Housing prices are expected to rise moderately (+1.5% to +2%) due to increased demand and favorable financing conditions.

• Suburban regions and secondary cities will remain particularly attractive for buyers and investors seeking strong returns.

Rising Demand for Affordable Housing

Lower financing costs encourage first-time buyers to enter the market, boosting demand for affordable residential properties.

Controlled Real Estate Risk

The UBS Real Estate Bubble Index is projected to remain at a low level, indicating a minimal risk of a real estate bubble in 2025.

4. Strategies for Real Estate Stakeholders in 2025

For Homeowners and Buyers

• Leverage Low Rates: Stable or slightly declining mortgage rates offer opportunities to refinance loans or enter the property market.

• Opt for Long-Term Durations: Choose a fixed-rate mortgage with a 10- or 15-year term to secure stable costs over the long term.

• Compare Options: SARON mortgages provide cost-effective solutions for those comfortable with moderate fluctuations.

For Real Estate Investors

• Diversify Portfolios: Invest in high-demand residential properties in growth regions.

• Maximize Returns: Take advantage of low-cost financing to enhance project profitability.

• Anticipate Trends: Focus on properties adhering to ecological standards, meeting the growing demand for sustainability.

For Property Developers

• Focus on Accessibility: Develop housing for first-time buyers and young families.

• Optimize Financing: Utilize favorable construction loans to launch innovative projects.

• Collaborate with Institutional Investors: Secure funding through strategic partnerships.

5. Challenges for 2025

Despite a favorable environment, some challenges must be anticipated:

• Geopolitical Uncertainties: International tensions could affect global growth and monetary policy.

• Shifts in Demand: While demand is rising, specific segments (luxury or commercial properties) may face slower growth.

• Increased Competition: Investors and developers must stand out with innovative projects aligned with consumer expectations.

Conclusion

The year 2025 offers significant opportunities for all stakeholders in the Swiss real estate market. Stable interest rates, controlled inflation, and growing demand for affordable housing create an ideal environment for pursuing projects.

Homeowners and buyers can benefit from attractive mortgage rates, while investors and developers have the conditions needed to maximize returns or develop new projects. However, vigilance regarding global economic developments and tailored strategies will be essential to capitalize on this promising environment.

FAQ: Swiss Real Estate and Interest Rates in 2025

1. Why is the SNB maintaining a low policy rate?
 

The Swiss National Bank aims to support the economy amidst geopolitical uncertainties and maintain low inflation. With inflation projected below 0.5%, low rates stimulate investments and the real estate market.

2. What is a SARON mortgage?
 

A SARON mortgage is a variable-rate loan based on the SARON interbank rate. It offers reduced financing costs during periods of low rates but may fluctuate with market conditions.

3. Should I choose a fixed or SARON mortgage in 2025?
 

SARON mortgages are ideal for borrowers comfortable with some volatility, while fixed-rate mortgages are better suited for those seeking long-term stability, particularly over 10- or 15-year terms.

4. Which regions are most promising for real estate in Switzerland in 2025?
 

Suburban areas and secondary cities like Lausanne, Basel, and Lugano present attractive opportunities due to growing demand and moderate prices compared to major cities like Geneva or Zurich.

5. How can I mitigate risks when investing in real estate?

• Diversify investments across residential, commercial, and mixed-use properties.

• Analyze local market trends and consumer expectations (e.g., sustainability, affordability).

• Work with experts to gain informed insights and optimize financing.

Ramzi Chamat
OAKS GROUP SA