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All information about the Saron mortgage

Saron Mortgage" refers to a reference interest rate for mortgages in Switzerland. "Saron" stands for "Swiss Average Rate Overnight", and it is an interest rate based on the average interest rate for Swiss franc (CHF) overnight transactions.

Since 2021, the Saron has replaced the previous reference interest rate, the Libor (London Interbank Offered Rate), which was abolished due to scandals and a lack of liquidity. The Saron is used to calculate interest rates for variable mortgages in Switzerland.

Advantages of the Saron mortgage

Transparent calculation

The Saron mortgage offers a transparent and comprehensibleCalculating the interest rate, as it is based on the average of the interest rates actually traded.

Adaptation to market developments

By using the Saron as a reference interest rate, the mortgage can react more flexibly to changes in the money market, which can be advantageous for borrowers, especially in times of interest rate fluctuations.

Lower risk of manipulation

Compared to previous benchmark rates such as Libor, the use of Saron reduces the risk of manipulation as it is based on actual transactions and is less susceptible to external influences.

Disadvantages of the Saron mortgage

Complexity for the customer

Calculating the Saron interest rate can be complex, which some consumers may find difficult to understand. This can lead to uncertainty and confusion, especially when compared to simpler interest rate models.

Higher uncertainty in long-term forecasts

Since the Saron is based on short-term overnight trades, it may be less stable in long-term forecasts. This can create uncertainty for borrowers seeking to undertake long-term financial planning.

Possible volatility of the Saron rate

The Saron can be susceptible to short-term volatility as it is based on daily market prices. This could lead to unexpected fluctuations in theMortgage interest rates lead, which can mean a certain degree of uncertainty for borrowers.

Who is the Saron mortgage suitable for?

Flexible mortgage borrowers: The Saron mortgage is particularly suitable for flexible mortgage borrowers who want to benefit from interest rate fluctuations. By adjusting the interest rate to short-term market developments, mortgage borrowers can benefit from attractive conditions in times of low interest rates.

Financially sensitive customers: For customers who want a transparentInterest calculation If you prefer, the Saron mortgage offers clarity and comprehensibility. Using the Swiss Average Rate Overnight as a reference interest rate reduces the risk of manipulation and provides a solid basis for financial planning.

Risk-conscious mortgage borrowers: Mortgage borrowers who value long-term stability should carefully consider the Saron mortgage. Although short-term volatility is possible, risk-conscious mortgage borrowers can benefit from the adaptability of the Saron rate and better adapt their financing to market changes.

Overall, the Saron mortgage is an innovative option that can offer advantages for certain mortgage borrower profiles. However, it is advisable to be fully informed about how it works and potential risks before making a decision. For further advice, we recommend consulting a financial expert.

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FAQ on the subject of Saron mortgage

What is a SARON mortgage?

The SARON mortgage is a type of mortgage in Switzerland where the interest rate is linked to the SARON (Swiss Average Rate Overnight). The SARON is a reference interest rate that reflects the average interest rate for unsecured overnight transactions in the Swiss interbank market.

How is the SARON calculated?

The SARON is determined based on transaction and offer data provided by a selected panel of banks. It reflects the average interest rate for unsecured overnight transactions on the Swiss interbank market.

Why was SARON introduced?

The SARON was introduced in response to criticism of the previous benchmark interest rates and the associated manipulation scandals. It is considered more transparent and harder to manipulate.

How is SARON different from LIBOR?

While LIBOR is based on bank estimates, SARON is based on actual transaction data, making it less susceptible to manipulation. The SARON is also a shorter-term interest rate because it is calculated daily.

Is a SARON mortgage variable?

Yes, since the SARON is an overnight rate, the SARON mortgage is considered variable. Your interest rate may be adjusted periodically depending on SARON fluctuations.

How often is the interest rate on my SARON mortgage adjusted?

This may vary depending on your agreement with your bank, but typically the interest rate is adjusted daily or monthly based on SARON fluctuations.

Can the interest rate become negative?

Yes, in times of extremely low or negative interest rates, SARON can fall below zero. This could lead to banks charging a margin to compensate.

What are the advantages of a SARON mortgage?

A key advantage is transparency and being tied to a less manipulable interest rate. When interest rates are low, borrowers can also benefit from lower mortgage rates.

What are the disadvantages of a SARON mortgage?

The main disadvantages are the unpredictability and potential volatility of the interest rate as it can fluctuate on a daily basis.

How does the Swiss National Bank influence SARON?

Indirectly, through their monetary policy and their interventions in the money market. The SNB can influence the SARON by changing the interest rate on sight deposits or using other monetary policy instruments.

Is the SARON mortgage suitable for everyone?

Not necessarily. It is suitable for people who are willing to accept the risk of interest rate fluctuations and who want to potentially benefit from low interest rates.

How does an interest rate increase affect my SARON mortgage?

When interest rates increase, the SARON usually also increases, resulting in higher mortgage interest rates.

Can I convert my SARON mortgage into a fixed-rate mortgage? This depends on your bank and your mortgage agreement. Some banks may allow this for a fee.

What happens at the end of the term of my SARON mortgage?

At the end of the term, you can either renew your mortgage, convert it to another type of mortgage or pay it off in full.

How can I check the current SARON interest rate?

The SARON is published daily and is accessible on the websites of the SIX Swiss Exchange and the Swiss National Bank.

Which banks offer SARON mortgages?

Many large Swiss banks and some smaller financial institutions offer SARON-based mortgage products.

Can I combine a SARON mortgage with another type of mortgage?

Yes, some banks offer mixed mortgage products where parts of the loan are granted at different interest rates (e.g. Fixed and SARON).

How secure is a SARON mortgage compared to other types of mortgages?

While the SARON is considered less manipulable, a SARON mortgage carries the risk of interest rate fluctuations, which can lead to unpredictable payments.

Are there fees for switching from LIBOR to SARON?

This may vary depending on the bank. Some banks may charge fees, while others make the transition free.

Where can I find more information about SARON mortgages?

For detailed information, you should contact Swiss banks or mortgage advisors directly or consult the official websites of the Swiss National Bank and SIX Swiss Exchange.

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