SNB made biggest cut since 2015. It looks like we’re heading back to zero again if not negative.
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Can they also reduce my rent and medical insurance
In principle, you can ask for a rent discount.
When the reference rate is reduced.
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Indeed, the SNB may be changed anytime, while the mortgage reference rate is only changed a few times per year o specific day, right?
If I understand it, the reference rate for mortgages takes some kind of average of mortgage interest, so changes in central bank rates will take time to feed into that statistic (e.g. for those mortgages not based on SARON) and then on top of that, I’m not sure at what frequency the reference rate itself is updated.
The insurance companies probably park their funds overnight at the National Bank. They make less money, you pay more.
Quarterly.
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They make it a bit more complicated than this but basically the official rate is the weighted average of all mortgages outstanding. The last reading, end of Q3, gave 1.63% which is just enough to get rounded up to 1.75% (the range of 1.63-1.87 gets rounded to 1.75). One notch less and the reference rate sinks to 1.5%.
And mortgage rates have been sinking before the cut already.
The fixed term ones as the banks were betting the SNB would cut the rate.
They banks here that give out mortgages are not betting. They are using the bond market to hedge.
Swiss mortgages are pretty flat across maturities right now.
Rates look like they are back on their way to zero, if not negative.
You can only get a discount if the rate is higher when you sign the contract; in reality, most companies follow the health insurance strategy, delay, deny and defend. So they will ignore you, deny you have any claim and then try and fight when you eventually manage to make yourself heard.
Pundits expect 50/50 chance of rate cut to 0.25%.
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A near 90% majority of economists, 28 of 32, in a March 12-17 Reuters survey predicted the SNB will cut its key interest rate by 25 bps on Thursday to 0.25%. The rest expected no move.
And this is precisely why the US calls Switzerland a currency manipulator.
Potential recession on the horizon. A third of Swiss manufacturing business is already in short-hours (kurzarbeit). If a recession materializes, people will want to park money in Switzerland, the Franc shoots up and the manufacturers in kurzarbeit go bankrupt…but, not if the SNB lowers the interest rate.
Oh, exciting times!
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Regretfully cutting the rate by 0.25 to 0.25 doesn’t alter the worldwide view that the franc is a safe haven.
If they wanted to actually drive down the value of the franc they would require large (500k) non-resident depositors to prove their money was earned legally. Lacking proof a 5% negative interest would apply.
CHF to fall further?
