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Taking out a mortgage means choosing between two main models: SARON or fixed-rate. Your decision depends on your ability to absorb potential increases in monthly payments and the stability of your personal budget:

  • The SARON mortgage is a product whose rate is indexed to the Swiss money market, allowing you to pay less when interest rates decline;
  • The fixed-rate mortgage is a loan where the interest rate remains unchanged throughout the entire contract, protecting you against inflation and sudden cost increases;
  • While SARON can lead to savings, fixed rates provide long-term security.

SARON mortgage: a variable rate indexed to the SNB

The SARON (Swiss Average Rate Overnight) replaces the former Libor. It is based on real transactions on the Swiss money market, making it transparent but highly responsive to decisions by the Swiss National Bank.

SARON cost structure

The rate paid by the borrower consists of a reference rate calculated over a period (often 3 months), plus a fixed margin set by the bank:

  • Full transparency: data comes from SIX Group, preventing any manipulation.
  • Flexibility: most contracts allow conversion to a fixed rate if market conditions worsen, offering an exit option in case of sustained rate increases.

Who is SARON suitable for?

This product is designed for borrowers who can absorb sudden increases in monthly payments. Choosing a SARON mortgage requires monitoring economic developments.

Historically, SARON tends to be more advantageous than fixed rates over the long term for those willing to accept volatility.

Fixed-rate mortgage: maximum security

This type of loan locks in the interest rate for a period ranging from 2 to 25 years. It provides full protection against market fluctuations and is ideal for stable incomes or rental investments.

Predictability and budget management

The main advantage of a fixed rate is cost certainty. Once the contract is signed, no active management is required:

  • Full protection: monthly payments remain unchanged even if interest rates rise sharply.
  • Financial peace of mind: this stability makes long-term financial planning much easier.
  • Simplicity: unlike SARON, you do not need to follow central bank decisions or inflation trends.

Limitations of fixed-rate mortgages

In exchange for security, flexibility is limited:

  • Cost of security: you do not benefit from falling interest rates, effectively paying a premium for stability.
  • Early termination fees: ending the contract early, for example due to a sale or divorce, often leads to significant financial penalties.
  • Refinancing risk: if your mortgage expires when rates are high, the financial impact can be substantial.

How to choose between SARON and fixed rate?

Your choice should not be based solely on current rates, but on your ability to withstand adverse scenarios. This decision determines the stability of your budget over the next 10 to 15 years.

Assessing your risk tolerance

Ask yourself how a 2% increase in rates would affect your standard of living:

Conservative profile

Opt for a fixed rate, especially when rates are historically low. This option offers full predictability and protects against unexpected increases.

Opportunistic profile

SARON allows you to benefit immediately from any easing of monetary policy. It is suitable for borrowers with sufficient financial flexibility.

Key decision indicators

Beyond your risk appetite, consider the following factors:

  • Yield curve: analyze the spread between short-term and long-term rates. If the difference is small, locking in a fixed rate becomes very attractive.
  • Holding period: if you plan to sell in the short term, SARON offers flexibility and avoids costly early repayment penalties.
  • Inflation outlook: SARON is directly influenced by SNB decisions. If inflation is expected to rise, a fixed rate allows you to lock in borrowing costs.

Mixed strategy: a balanced approach

You can split your mortgage into several parts to benefit from both models:

  • Secure a base (fixed rate): for example, allocate 50% of the loan to a fixed rate to ensure stable payments.
  • Optimize costs (SARON): place the remaining 50% in SARON to benefit from lower rates.
  • Spread risk: stagger maturities (e.g., 5-year and 10-year terms) to avoid refinancing the entire loan at an unfavorable time.

If market conditions become too volatile, you can usually convert the SARON portion into a fixed rate.

FAQ: SARON vs fixed-rate mortgages

Can you easily switch from SARON to fixed?

In most cases, yes, provided you stay with the same lender.

What is the ideal fixed-rate term in 2026?

Terms of 5 to 10 years remain standard, balancing protection and flexibility.

Can SARON become negative?

Yes, but banks generally apply a floor at 0%, to which their margin is added.

What are the costs of early termination?

For fixed-rate mortgages, the bank calculates the lost interest until maturity, which can amount to tens of thousands of francs.

How does the SNB influence my mortgage?

The SNB’s policy rate directly impacts SARON and influences long-term fixed mortgage rates.