SARON mortgage: Flexible Mortgage | Replacement Libor | key4.ch
Home Mortgage SARON mortgage

SARON mortgage

The successor to the Libor mortgage

SARON is a money market rate and will replace the Libor interest rate. Find out everything you need to know about SARON and our new SARON mortgage.
What is a SARON mortgage?
How is the interest on a key4 SARON mortgage calculated?
Who is a SARON mortgage suitable for?
Why is Libor being replaced by SARON?
What are the differences between Libor and SARON?

Our indicative interest rates*

SARON

from 2.01 %

3-year fixed-rate mortgage

from 2.62 %

5-year fixed-rate mortgage

from 2.51 %

10-year fixed-rate mortgage

from 2.58 %

These interest rates are for illustrative purposes only and are updated regularly (current status as at 01.04.2023). They do not constitute a binding financing offer.

The interest rates shown were determined by key4 on the basis of the following financing parameters: canton: Zurich, loan amount: CHF 500,000, affordability: 24%, loan-to-value ratio: 50%, mortgage payout date: 02.05.2023.

Other interest rates and terms available

Every financing is individual. We’re happy to help you find an interest rate offer that suits you. Simply arrange a consultation online.

Find an interest offer now

What is a SARON mortgage?

A SARON mortgage is a money market mortgage based on SARON (Swiss Average Rate Overnight). SARON has existed since 2009 and is calculated based on completed transactions and binding quotes (buy and sell prices) posted on the Swiss repo market.

The calculation method was developed by SIX Group AG (SIX) and the Swiss National Bank (SNB).

How is the interest on a key4 SARON mortgage calculated?

SARON is valid for the interest period from the current day until the following morning. To avoid having to pay interest every day, key4 offers interest periods of three months. To determine the interest rate for the relevant period, SIX offers the reference interest rate “SARON Compound.” This is calculated from the average of daily compounded SARON interest rates, to which an agreed margin is added. This means that the interest payment amount is determined at the end of the interest period rather than at the beginning.

A brief guide to the SARON

A brief guide to the SARON

Factsheet

Who is a SARON mortgage suitable for?

Compared to a fixed-rate mortgage, in a normal interest environment the interest rate of a SARON mortgage is generally lower, although it can change quickly. That is why a SARON mortgage is suitable for you if you actively follow developments on the money and capital markets, expect interest rates to stay the same or go down, and can cope with the financial consequences of interest rate fluctuations.

A SARON mortgage is of interest to you if you:

  • looking for flexible financing to buy your own home.
  • follow developments on the financial markets.
  • can accept short-term interest rate fluctuations.
  • want to benefit from attractive interest rates.

Why is Libor being replaced by SARON?

Since the financial crisis, banks have increasingly been lending to each other only against collateral. Consequently, for many loan periods, no truly unsecured transactions are concluded at all and prices can only be estimated. As a result, the Libor rate is no longer as meaningful and is no longer suitable as a reference rate in the longer term.

What are the differences between Libor and SARON?

There are two main differences between Libor and SARON.

  1. Whereas SARON is based on completed transactions and binding quotes, Libor is calculated based more on estimates by selected banks.
  2. SARON is an overnight rate and is therefore valid for one day or night. Libor is the interest rate for loans of money for a certain period, usually three or six months.

For a SARON mortgage, this means that unlike for a Libor mortgage, the interest rate and thus the interest payment has to be calculated on the second to last day of the interest period, and not at the start of the period.

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What are the advantages and disadvantages?

Attractive and market-oriented Swiss base rate
Possibility to switch to a key4 fixed-rate mortgage at any time
Indefinite contract term
Fluctuating interest rates, resulting in less planning reliability

How will interest rates evolve?

Receive our interest rate forecast regularly and free of charge by e-mail and find out more about future interest rate trends.

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How much is your property worth?

We need only a few details about your property to estimate its current market value. We’ll send you the result free of charge by email.

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