Swiss tenants benefit from drop in rent reference rate

Hypo reference interest rate falls to 1.25 per cent Keystone-SDA

The Swiss mortgage reference interest rate that is used to set rents for tenants has fallen from 1.5% to 1.25%.

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The decrease was announced by the Federal Housing Office (BWO) on Monday.

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Specifically, the average interest rate relevant for the reference interest rate fell by 7 basis points to 1.37% and thus just below the threshold value of 1.38%, which is decisive for the reduction. The interest rate is commercially rounded and adjusted by 25 basis points if it exceeds or falls below the threshold.

The reference interest rate for residential rents was last reduced to 1.5% in March 2025, following two increases in the middle and end of 2023. The BWO determines the reference interest rate based on the quarterly average interest rate of Swiss banks’ domestic mortgage loans.

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Rent reductions possible

According to the BWO, the reduction in the reference interest rate now gives tenants a basic entitlement to a reduction of 2.91% if the previous rent was based on a reference interest rate of 1.5%.

However, in addition to the change in the reference interest rate, other cost factors, in particular inflation, can play a role in the rent structure.

Translated from German by DeepL/mga

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