To put it simply, inflation or general inflation, economic development and the monetary policy of the Swiss National Bank (SNB) play a decisive role. If a bank anticipates inflation, this inflation rate is normally integrated into the interest rate. The SNB influences interest rates, and indirectly mortgage rates, via the key interest rate and the money supply.
The essential difference with Libor or SARON mortgages as an alternative is that the interest rate is variable. The interest rate is usually adjusted to the current market rate every three months. The interest rate charged to the client may vary from quarter to quarter.
Libor or SARON mortgages are the right choice if the client expects low interest rates. Generally speaking: in a “normal” interest rate environment, financing on a short-term basis is cheaper. For the simple reason that there are no costs for interest hedging. However, depending on mortgage interest rate trends, liquidity should be kept available in case mortgage interest rates rise. Ability and willingness to take risks are considered key prerequisites for financing on the basis of Libor or SARON. Anyone who opts for this type of financing should also closely follow mortgage interest rate trends.