A money market mortgage is a mortgage with a variable interest rate which follows a money market index rate. The term money market denotes the portion of financial markets made up of bids and offers for short-term loans. Mortgage lenders typically add a markup to the underlying money market rate. Together, the underlying money market rate and the lender’s markup make up the mortgage’s interest rate.
LIBOR mortgages and SARON mortgages are both money market mortgages. Because LIBOR mortgages are no longer offered in Switzerland, Swiss money market mortgages are primarily SARON mortgages.
In addition to money market mortgages (SARON mortgages), Swiss mortgage lenders may also offer fixed-rate mortgages and adjustable-rate mortgages. In Switzerland the terms adjustable-rate mortgage and variable mortgages do not denote money market mortgages. In contrast to money market mortgages, the interest rates of adjustable-rate mortgages rarely change.
More on this topic:
Compare Swiss money market mortgage interest rates now
