Interest shock in Switzerland: SNB reduces key interest rate to zero percent!

Interest shock in Switzerland: SNB reduces key interest rate to zero percent!

The current interest rate reduction of the Swiss National Bank (SNB) provides considerable uncertainty in the markets and among the savers. The SNB has reduced the key interest rate by 0.25 percentage points to zero percent, which represents the sixth reduction in a row. The reason for this decision is the persistently low inflation, which was –0.1 percent in May 2025. For the current year, SNB predicts an average inflation of only 0.2 percent and an increase to 0.5 percent in 2026. Despite these low interest rates, however, an introduction of negative interest rates has been rejected, while SNB President Martin Schlegel shows high hurdles for its implementation. Nevertheless, the SNB keeps the option open for future negative interest rates.

The economic prospects indicate slow growth in the next quarters. The reasons for this include geopolitical uncertainties and protectionist tendencies. The real estate market is assessed as particularly vulnerable. Experts see a realistic scenario in return to negative interest rates and warn that this could bring additional risks in the real estate sector.

effects on the real estate market

The monetary policy of the SNB has a direct impact on the mortgage market, since changes in key interest rates influence the costs of mortgage loans. Lower interest rates, as they now apply, promote credit demand and consumption, while higher interest rates cause the opposite. Historically, the introduction of negative interest rates in 2015 led to an increase in real estate prices. However, if the SNB continues to lower interest rates or introduces the negative interest rates, this could have a negative impact on the real estate market. These concerns are reinforced by the volatile interest rate development of recent years. The SNB formulates and implements its monetary and monetary policy with the aim of price stability and an inflation goal of lower, but near 2 percent.

The next interest rate decision by the SNB is expected for September 25, 2025 and could be crucial about how the economic framework is developing. Real estate buyers and owners should prepare for possible future interest increases and think about which mortgage strategies are best suited in times of low interest rates.