Renting in Switzerland is likely to become more expensive after the cost of mortgages has gone up.
The Swiss Federal Housing Office raised the mortgage reference rate from 1.25 percent to 1.50 percent at the beginning of June, it said in a statement Thursday (statement in German).
Knock On Effect
Landlords are expected to pass on the increases to tenants which in turn, could fuel inflation.
The reference interest rate, first introduced in 2008, is based on the quarterly average interest rate of domestic mortgages from Swiss banks. This rose to 1.44 percent from 1.33 percent previously, the statement said.
A further increase in the reference interest rate will come into force when the average rate exceeds the 1.62 percent mark. The next regular recalculation is due in early September, according to the statement.
If the rate increases by 25 basis points, rents can be raised by 3.0 percent, it said.
Downward Trend
Since its introduction, the reference interest rate has been on a steady downward trend, falling as low as 1.25 percent in March 2020 from its initial 3.5 percent.
