Fed holds rates steady – Swiss mortgages follow other rules

The US Federal Reserve left its target range for the policy rate unchanged at 3.75 to 4 percent on 28 October 2026. It continues to describe inflation as elevated and wants to wait for additional information before its next decision. The vote was ten to two. The two dissenters called for a quarter-point increase, not a cut.

For Swiss households this is an important signal from the international financial system, but not yet a new mortgage offer. A dollar policy rate and the price of a franc loan are different quantities. Between them lie Swiss monetary policy, longer-term market rates and the terms of the individual contract. These levels cannot be skipped over with a single headline about the Fed.

At the same time the Fed describes the US economy as strong, with robust investment activity and resilient consumer spending. Its wait-and-see stance is therefore not an admission that the inflation question is settled. The statement still names a two percent inflation target but does not fix the next rate move. Bloomberg also describes the decision as a pause without a clear signal for December.

For SARON, the SNB is closer than Washington

The Swiss National Bank left its policy rate at zero percent in the assessment it communicated in September. Its discussion summary published on 22 October confirms this decision. The large gap to the American rate level is therefore first of all a description of two currency areas. It does not mean that a Swiss bank passes the US rate directly on to its mortgage customers.

With a SARON mortgage, the interest payable consists of the compounded Swiss money market rate plus a margin. Luzerner Kantonalbank explains this structure in its product information; PostFinance also discloses the components separately. For its published three-year SARON mortgage, the figure is the SARON compounded over three months plus a margin from one percentage point. A margin is not the entire loan rate.

A zero percent SNB policy rate therefore does not mean free home ownership on credit. Nor can a specific next SARON value be calculated from today's Fed decision. For an existing contract, what counts is the agreed calculation periods, the margin and other contract terms. A general policy rate headline does not replace reading them.

Fixed-rate mortgages can move despite a rate pause

With fixed-rate mortgages the rate is fixed for the agreed term. For new contracts, however, conditions on the capital market are decisive. The Federal Office for Housing (BWO) also points this out. Expectations about future rates can already be reflected there before a central bank changes its current rate. A Fed pause therefore does not guarantee a pause in new Swiss fixed-rate mortgage offers.

A concrete price quote also needs a timestamp. For ten-year fixed-rate mortgages, PostFinance published an indicative rate from 1.81 percent on 28 October at 9.15 a.m. According to the provider, this applies to the best credit rating and owner-occupied residential property, is non-binding and relates to new business. It was shown before the later US rate decision and does not prove any reaction to it. Nor is it an average for all Swiss borrowers.