The mortgage reference rate is going down for the second time in 2025. On September 2, 2025, the rate will be lowered from the current 1.5 percent down to 1.25 percent. The announcement by the Federal Office for Housing on Monday morning. The mortgage reference rate is based on the average interest rate across mortgages from Swiss banks. Between the end of March and the end of June, 2025, the average mortgage rate went down from 1.44 percent to 1.37 percent.
The mortgage reference rate already sank in March 2025, at that time from 1.75 percent to 1.5 percent. The reference rate remained unchanged in June due to rounding, in spite of the downward trend in the average mortgage rate from 1.55 to 1.44 percent.
Like the rates we saw between March 2020 and June 2023, the new mortgage reference rate of 1.25 percent is a historical low
What does the new mortgage reference rate mean for renters?
The decline in the mortgage reference rate is good news for many renters, who can now apply for a rent reduction. A rent reduction may be possible if the current mortgage reference rate used for your rental agreement is higher than the new mortgage interest rate. The rate applicable to your contract is normally stated in your home rental agreement, or in the most recent communication about reference rates sent by your landlord.
The table below provides a point of reference for possible rent reductions.
Rent reductions by mortgage reference rate
| Mortgage reference rate |
Maximum possible rent reduction |
| 1.25% |
0.00% |
| 1.50% |
2.91% |
| 1.75% |
5.66% |
Renters should be aware though, that the actual rent reductions are rarely identical to those shown in the table above. That is because there are several different factors besides the reference rate that can also affect your rent. For example, landlords can also account for inflation.
How should I proceed?
Important: If you are eligible for a rent reduction, you should take action and send a registered letter requesting a rent reduction. The Swiss renter’s association Mieterinnen- und Mieterverband offers a template that you can use for your application. It is worth noting that there are a few landlords that automatically lower rents when the mortgage reference rate changes.
More on this topic:
Can the landlord raise my rent?
Tips for cutting your housing costs
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