The term "imputed interest rate" refers to an estimated interest rate which accounts for future rate changes. An imputed interest rate is used to calculate interest when the genuine interest rate is unknown.
Imputed interest rates are most commonly used for tax purposes, but Swiss banks use an imputed interest rate to calculate affordability ratios. Swiss banking guidelines issued in 2014 require homebuyers to maintain a sustainable balance between income and expenses.
When negative interest rates are imposed, banks calculate borrower affordability ratios using imputed interest rates, to insure sustainability of loans should interest rates go up. Most banks use an imputed interest rate of 5% when calculating mortgage eligibility.
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