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SNB cuts key interest rate to 0% – how will the Swiss real estate market react?

On 19 June 2025, the Swiss National Bank lowered its key interest rate by 0.25 percentage points to 0%. The aim of this move is to combat deflationary pressures, support the economy, and curb the continued appreciation of the Swiss franc. Improved financing conditions are expected to lead to further price increases in the real estate market.

On 19 June 2025, the SNB cut the key interest rate to 0% to counter deflation – likely pushing property prices higher.

Background for the renewed interest rate cut

One of the main reasons for the interest rate cut is the very weak inflation. In May 2025, consumer prices fell by 0.1 % compared to May 2024.

Why has inflation fallen so sharply? The very strong Swiss franc has caused the prices of imported goods to fall and oil prices have fallen by an impressive 9.6 % compared to the previous year. In important areas, however, the picture is different: prices for services have risen by 0.6 % and residential rents have even increased by 2.6 %. There can therefore be no talk of broad-based deflation as yet.

Consequences for the property and mortgage market

Mortgage interest rates had already fallen significantly in the run-up to the interest rate decision and ten-year fixed-rate mortgages are available for well under 1.5% in some cases. SARON mortgages are reacting directly to the interest rate cut, although the banks will continue to try to widen their margins. It can therefore be assumed that SARON mortgages will fall by slightly less than 0.25%.

Falling mortgage rates lead to increased demand for property and rising property prices. The shock of the interest rate turnaround from 2023 has now definitely been overcome and even a return to negative interest rates seems to be within reach.