SARON Forever? Why Swiss Mortgage Owners Are Ditching Rate Forecasts for Good

Today? Those same outlets are announcing that rates have fallen again. The ten-year fixed mortgage (Festhypothek) index dropped from 1.77 percent to 1.64 percent. The cheapest ten-year fixed rate now sits at 1.42 percent.

It’s enough to make you want to throw your hands up, ignore every forecast forever, and just… stick with SARON.

I get it. The sentiment is spreading across Swiss homeowner forums. “I am gonna stick to Saron (like forever)”, one homeowner declared, capturing what feels like a growing mood of mortgage-rate fatigue. Why pay for certainty when the experts can’t even agree on what tomorrow looks like?

The “Experts” Have a Credibility Problem

Here’s the uncomfortable truth: mortgage rate forecasting in Switzerland has become something of a spectator sport, and the experts are batting around .500 at best.

In September, the rate index climbed to 1.77 percent, the highest since spring 2025. The Bundesobligation (Swiss ten-year government bond) was yielding up to 0.7 percent. Experts pointed to global inflationary pressures, the US midterm elections, oil prices above 110 dollars a barrel, and French debt woes as reasons rates would keep climbing.

Then October arrived. Inflation came in at a mild 1.0 percent. Capital flooded into Switzerland as a safe haven. And just like that, rates fell.

Florian Schubiger, managing director of hypotheke.ch, called it “not a trend reversal, but a settling at lower levels.” Which is a diplomatic way of saying: nobody really knows what happens next. He himself admits that “a renewed rate increase is just as possible as further decline.”

That’s not a forecast. That’s a coin flip with extra steps.

The Great Swiss Mortgage Divide: Fixed vs. Variable

Before we dive deeper, let’s lay out the battlefield. In Switzerland, you’ve essentially got two camps:

The spread is real. For a million-franc mortgage, a 0.8 percentage point difference means 8,000 francs a year. That’s not pocket change, that’s a nice holiday, or half a year of Krankenkasse (health insurance) premiums.

“I Sleep Better at Night”: The Case for Fixed Rates

But here’s the thing about the SARON-forever crowd: they’ve got recency bias on their side. SARON has been in negative or near-zero territory for years. The SNB’s key interest rate sits at 0.00 percent. If you’d gone SARON in 2020, you’d have paid almost nothing for years.

The fixed-rate crowd, though, has memory. They remember three years ago, when SARON-3M jumped to 1.7 percent almost overnight. Homeowners with variable mortgages suddenly faced costs they hadn’t budgeted for. Some struggled.

“I have a 10y 1.4% fixed mortgage. For me it’s peace of mind”, one homeowner put it. Another who locked in at 1.3 percent says they “don’t lose any sleep stressing over what I may be paying in a few months.”

That’s not financial advice. That’s psychological self-care wearing a banker’s suit.

There’s also the prepayment trap that catches many SARON converts. If you decide to switch from a fixed mortgage to SARON mid-term, banks hit you with a Vorfälligkeitsentschädigung (prepayment penalty) that can be brutal. Some homeowners report being penalized based on rates that initially assumed negative interest rates, making the penalty far larger than current market conditions justify.

The Case for SARON Forever: It’s Not Just About the Rate

So why are more homeowners leaning toward SARON as a permanent solution?

For starters, the current numbers are compelling. With the SNB holding rates at zero and economists debating whether they’ll move in 2027, SARON mortgages consistently undercut fixed rates. Raiffeisen’s 5-year SARON at 1.00 percent versus their 5-year fixed at 1.88 percent? That’s a gap you could drive a Tesla through.

But there’s a deeper, more interesting argument: why pay extra for certainty when the certainty is an illusion?

Think about it. A ten-year fixed rate is essentially a bet that the SNB will keep rates low enough over the next decade that your 2.0+ percent rate looks reasonable. It’s insurance, sure. But it’s insurance priced by people who, just two weeks ago, told you rates were heading in the opposite direction.

The psychological argument cuts both ways too. Fixed-rate owners might sleep better, but there’s also anxiety in watching rates fall and knowing you’re locked in above market. Many homeowners who locked in at 1.7-1.8 percent during the early 2026 spike are now watching rates drift back to 1.4-1.5 percent. They can’t access those savings without triggering penalties.

SARON owners have a different kind of peace: the peace of knowing their rate resets quarterly, always reflecting current conditions. They’re not playing the forecasting game at all. They’ve simply decided that no one, not the SNB, not the economists, not the banks, can reliably predict where rates go next.

The Real Risk Nobody Talks About

Here’s what worries me about the SARON-forever movement: it works beautifully in a low-rate environment, and it becomes painful when the SNB needs to fight inflation.

The SNB has signaled it considers zero interest rates “outdated”, that’s Raiffeisen’s words, not mine. If inflation reaccelerates, the SNB could hike rates. SARON would follow. Your mortgage costs would rise. And unlike a fixed mortgage, there’s no cap on how high they might go.

Three years ago, SARON-3M hit 1.7 percent. That’s not catastrophic, but it’s a 170-basis-point swing from current levels. For a million-franc mortgage, that’s 17,000 francs a year in additional interest, unbudgeted, unplanned, and potentially painful.

The fixed-rate crowd calls this “insurance against the unknown.” And looking at the global picture, record sovereign debt, oil prices that refuse to stay calm, geopolitical instability, the unknown looks, well, unknown.

The Hybrid Solution: Don’t Choose, Diversify

Here’s my controversial take: you don’t have to pick a side.

Smart Swiss homeowners are increasingly splitting their mortgages, one tranche fixed for stability, one tranche SARON for cost savings. It’s not elegant, but it works. A 50/50 split means you’re never fully exposed to a rate spike, but you’re also never fully paying the fixed-rate premium.

There’s also the math worth doing on supplier choice. The differences between providers for the same product are staggering. Asga Pensionskasse offers a ten-year fixed at 1.63 percent. Valiant Bank charges 2.16 percent for the same term. For a mortgage over a million francs, that’s 5,300 francs a year, money you could be spending on actually enjoying Switzerland instead of making your bank happier.

And if you’ve got strong creditworthiness, you can negotiate. Mortgage specialists say borrowers with solid financials can often shave 0.2 to 0.3 percentage points off advertised rates. That’s worth thousands over a mortgage’s life.

What to Do?

Look, I’m not going to tell you to go SARON forever. That’s a decision only you can make based on your risk tolerance, your financial buffer, and how much you enjoy lying awake at 3 AM doing mental arithmetic.

But I will say this: the “experts” have lost their monopoly on your decision-making. If they can’t tell you with confidence what happens next quarter, why should you pay a premium to lock in their uncertainty?

And if you’re staring at an expiring fixed-rate mortgage right now, don’t panic. The current dip in rates is arguably a good moment to reassess. Just don’t expect anyone, least of all the experts, to tell you what happens next.

They don’t know. They never did.

The question isn’t whether SARON is right forever. It’s whether you’re comfortable admitting that no one knows what “forever” costs.