Interest & bonds

Here you can find an overview of key figures and obtain the information you need to make decisions on mortgages or investments. 

• Policy rates of central banks (SNB, ECB and the Fed): They control short-term interest rates – in particular, the SARON in Switzerland.
• Current mortgage interest rates (Switzerland) and SARON rates: Money market mortgages are based on these rates. 
• Swap rates in CHF, EUR and USD: These provide the basis for the yield curves on the money and capital markets. 
• Yields on government bonds (Switzerland, Germany and the United States): These are an important reference point for long-term interest rates. 
• Interest rate trends and forecasts, especially for mortgages, bonds and savings interest.

Interest rates represent the price of money. They affect virtually all households and companies: 

• Homeowners: Mortgage interest rates in Switzerland determine the costs of new financing, extensions and SARON mortgages. Both current interest rates and expected interest rate trends are key. Money market mortgages are closely aligned with the policy rate, while fixed-rate mortgages are more strongly influenced by expectations on the capital market. 
• Tenants: The reference interest rate for mortgages serves as a basis for rent adjustments. If it rises or falls, rents may be raised or lowered in certain circumstances. 
• Savers: The development of savings interest rates in Switzerland is strongly dependent on the SNB's policy rates. Higher interest rates make savings accounts more attractive again. 
• Companies: Interest rate developments influence borrowing costs and investments. Falling interest rates can support capital-intensive sectors such as construction and industry. 
• Investors: Interest rates have a direct effect on bonds. If interest rates rise, the prices of existing bonds tend to fall, whereas falling interest rates usually lead to higher prices for these bonds. Equity markets also respond to changes in interest rates. Low interest rates often increase the appeal of shares, while rising interest rates can have a dampening effect.

The SNB policy rate is the most important interest rate in Switzerland. It's set by the Swiss National Bank and determines short-term interest rates on the money market. The SNB uses this policy rate to influence the following: 

• The development of short-term mortgage interest rates 
• The general interest rate environment for savers 
• The general interest rate trend on the money market 

The policy rate is therefore a central point of reference for many other interest rates.

Central banks like the SNB, ECB and US Federal Reserve adjust their interest rate policy according to the level of inflation and the economic situation. 

• Low interest rates can support investment and economic activity. 
• High interest rates help to curb inflation but tend to have a delayed effect on the economy. 

In other words, monetary policy influences both the development of interest rates and the economic environment.

Swap rates are important reference values for various terms on the money and capital markets. The yield curves on the money and capital markets are based on swap rates. For this reason, they're particularly relevant when assessing fixed-rate mortgages and evaluating the overall interest rate structure.

Government bonds are debt securities that states use as a form of financing. Bonds are debt obligations with a fixed or variable interest rate and generally a fixed maturity and repayment date.

Interest rates and bonds usually move in opposite directions. 

Rising interest rates → falling bond prices 

Falling interest rates → rising bond prices 

Equities also respond to changes in interest rates: low interest rates can make equities more attractive, while rising interest rates can have a dampening effect. As a result, the development of interest rates influences the performance of securities portfolios.

Interest rates are closely related to each other: 

1. The SNB changes its policy rate. 
2. Short-term interest rates respond immediately. 
3. Expectations influence swap rates. 
4. Mortgage interest rates and bond yields adjust. 

This development is reflected in the yield curve.

As a rule, long-term interest rates are higher because both the default risk and the interest rate risk increase with longer terms. But there are exceptions: in the case of an inverse yield curve, short-term interest rates are higher than long-term rates. This typically occurs when the market expects falling interest rates or an economic slowdown.