Swiss Financial System
SARON Mortgages
SARON Mortgages describes how Swiss mortgages translate SARON-based money-market pricing into household borrowing costs, usually through a contractual margin and reset convention.
Definition
SARON Mortgages describes how Swiss mortgages translate SARON-based money-market pricing into household borrowing costs, usually through a contractual margin and reset convention.
Mechanism
The rate originates in the secured CHF money market rather than an unsecured bank panel. Daily observations are aggregated or compounded according to the relevant SIX methodology and contract convention.
Market relevance
Changes in SARON transmit quickly into floating-rate funding, derivatives and SARON-linked mortgages. The spread to the SNB policy rate also reveals conditions in secured franc liquidity.
What to monitor
Watch the SNB policy rate, repo-market conditions, fixing and compounding conventions, reset dates and the contractual margin charged above the reference rate.