The Switzerland mortgage trends of 2025
If you're looking to buy property in Switzerland, there's no better place to call home than the canton of Valais. Valais is home to picturesque landscapes, 2,000km of ski slopes, and the breathtaking regions of Crans-Montana, Verbier and Zermatt. With spectacular scenery and plenty of mountainous terrain to explore, Valais is an ideal location to buy property and truly make yourself at home.
If you're looking to buy a home in Switzerland, we've got you covered. In this article, we'll uncover the current real estate market, mortgage interest rates and the types of mortgages available in Switzerland to secure your dream property this year.
What is the current mortgage rate in Switzerland?
If you're looking to buy a home in Switzerland, you'll be pleased to hear that interest rates are continuing to stabilise following a period of higher interest rates. World events such as the coronavirus pandemic and the war in Ukraine caused inflation to rise significantly. As a result, the Swiss National Bank (SNB) raised interest rates to try and combat inflation. From early 2021, inflation rose and peaked above 3% in early 2022. As a result, the SNB carried out a series of mortgage interest rate increases, taking interest rates as high as 1.75% by June 2023.
Thankfully, following a period of rising interest rates, mortgage rates are now stabilising. As inflation fell below 2%, the SNB lowered its key interest rate three times by 0.25% each time, in March, June and September 2024 to its current level of 1% - good news for borrowers looking to secure property in Switzerland.
Switzerland's economic growth and stability have contributed to the easing of interest rates, but the mortgage interest rate you'll be offered will vary depending on the type of mortgage you choose and its term. The current benchmark rates for a 10-year-fixed-rate mortgage vary between 1.5% to 2%, whereas you can get 5-year-fixed-rate mortgages with an average interest rate between 1.4-1.8%. With this in mind, we can expect these competitive, lower mortgage interest rates to continue into 2025.
Types of mortgages in Switzerland
Switzerland offers several types of mortgages to suit different financial circumstances. We'll explain some of the most popular mortgage products and how each of them works below.
SARON mortgage
The SARON (Swiss Average Rate Overnight) mortgage replaced LIBOR (London Interbank Offered Rate) mortgages in 2021. SARON mortgages are based on the reference interest rate, meaning they have a variable interest rate that will fluctuate throughout the mortgage term. Unlike fixed-rate mortgages that offer you a guaranteed interest rate for a set period, SARON mortgages follow the SARON reference rate which can change daily. The interest you pay has two components, the SARON (an overnight interest rate and a markup added by your lender.
A SARON mortgage may suit you if you expect interest rates to fall, as you won't be locked into a higher rate, and you can afford to pay a higher interest rate should your rate go up. SARON mortgages are offered on all types of properties in Switzerland and it's possible to switch to a fixed-rate mortgage at any time.
Fixed-rate mortgage
As the name suggests, a fixed-rate mortgage is a type of mortgage loan whereby your interest rate remains the same for a fixed term, so you'll know exactly what your repayment amount will be each month. There are various terms available to suit different financial circumstances, but you'd typically take out a fixed-rate mortgage for 3, 5, 10 or 15 years.
As mentioned, a major advantage of a fixed-rate mortgage is its stability. You'll know exactly how much your monthly payments will be and you'll be protected against economic factors such as inflation that can cause interest rates to rise. A disadvantage to consider is that fixed-rate mortgages do offer less flexibility - if interest rates fall, you won't be able to switch to a better deal until your term ends.
Variable-rate mortgage
A variable-rate mortgage, otherwise known as an adjustable-rate mortgage, offers flexibility and no fixed term. 20 years ago, the variable-rate mortgage was the most popular but today its market share is only around 2%. This is likely because the fixed-rate mortgage is often too expensive when the market experiences falling interest rates. But the flexibility of this type of mortgage means you can easily switch to a different mortgage type if you'd prefer, but if your new mortgage is with a third-party institute, your current bank is likely to insist on a cancellation period of three to six months.
How to get a mortgage in Switzerland
If you already live in Switzerland with a residency permit B or permit C, getting a mortgage should feel fairly straightforward. With a B residence permit, you can apply for just one mortgage at a time. Whereas those with C residence permits can apply for multiple mortgages in one go.
To get a Swiss mortgage, you'll likely need to have at least 20% of the property cost saved up as a deposit, with at least 10% paid in real money rather than assets. Your mortgage payment can't exceed 33% of your annual net income. If you can tick both of those requirements off, you should be able to get a Swiss mortgage.
Getting a mortgage in Switzerland as a foreigner
If you don't have residency, when getting a mortgage in Switzerland you need to be aware of Lex Koller law. This Swiss federal law aims to limit foreign property ownership in Switzerland, to protect the Swiss real estate market from becoming over-populated by foreign buyers. Non-residents need to apply for a licence to buy from the competent authority in the canton where the property you're interested in is located. Once accepted, your authorisation is valid for three years.
Tips for buying property in Switzerland
The Swiss real estate market is known for its stability and high demand, and with its breathtaking views and inviting atmosphere, we don't blame you for wanting to call it home. Here are some of our top tips for buying property in Switzerland and what to watch out for:
- Be mindful of residency requirements: Non-residents face strict restrictions when looking to buy property in Switzerland. Make sure you research the requirements for buying real estate and whether you need to apply for authorisation.
- Be prepared for high down payments: Swiss mortgages typically require at least 20% of the property value as a deposit, with at least 10% in cash.
- Compare mortgage products and interest rates: Explore different types of mortgages and their individual interest rates to find the right loan for your financial circumstances. For example, while SARON mortgages may offer lower mortgage interest rates, they offer less stability and your rate may rise or fall depending on economic factors.
- Explore different locations: Residential property prices vary significantly depending on where in Switzerland you're looking to buy, so make sure you compare prices across different regions. Rural regions like Zermatt or Verbier are likely to offer more affordability than urban areas like Zurich and Geneva.
Looking to purchase a luxury chalet?
You're certainly spoilt for choice when it comes to beautiful, Swiss residential properties. If you're looking to buy a luxury chalet of your own, contact us today and the real estate experts at Steiger&Cie Sotheby’s International Realty can help you find your ideal luxury chalet in the canton of Valais.