If a client pays off a fixed-rate mortgage early, he must generally pay the agreed interest until the end of the term under the market-standard early repayment provisions of the mortgage agreement. In addition, a processing fee is charged if such a fee has been contractually agreed. According to the usual contractual provisions, the so-called reinvestment result is deducted from this amount, i.e. the amount that the bank could earn with a reinvestment of the capital repaid ahead of schedule in the money and capital market for the remaining term. Certain contracts also provide for a discount for the eliminated credit risk and the eliminated administrative expense.

Due to the rise in interest rates in 2022 and 2023, the interest owed by the clients until the end of the term was significantly reduced or completely eliminated for older, very cheap fixed-rate mortgages by the reinvestment income that could be achieved. Sometimes there were even surpluses which, depending on the specific contractual arrangement, were credited to the clients. Certain banks nevertheless took the view that the early repayment penalty was effectively a penalty that, in the best case scenario, would not be paid but would never lead to a payment to the client.

These periods came to an end in the year under review. In 2024, interest rates have fallen sharply, which has also led to a decline in reinvestment income for the banks. The early repayment of a fixed-rate mortgage has once again become expensive for clients. In the specific case, it was indeed the case that, at the time the information was provided by the bank, the reinvestment result would have fully covered the client’s interest due for the remaining term of the mortgage. The bank therefore informed him that no early repayment penalty would be payable. Between the time the information was provided and the early repayment of the fixed-rate mortgage by the client, interest rates had fallen sharply. The reinvestment result no longer covered the interest owed to it. An early termination penalty was paid, which was correctly calculated at CHF 4,500 based on the relevant contractual provision.

However, the question arose as to whether the client could still rely on the bank’s information that no early repayment penalty would be incurred. This information was provided to the client by e-mail with the indication that it was “informational”. It is likely that the bank wanted to use the term “indicative” instead of “informative” and to point out that the information was given based on the current interest rate situation and that, in the event of a drop in interest rates, an early repayment penalty could indeed occur. The Ombudsman shared the client’s view that the bank’s intended reservation should not have been understood by the client, who had no special knowledge in the financing sector, in the manner suggested by the bank. “Informative” means “for your information” and cannot be understood as a reservation of change.

In the Ombudsman’s view, the client was entitled to rely on the bank’s information, which did not indicate that, depending on the interest rate, an early repayment penalty might be payable in some circumstances. The Ombudsman therefore recommended that the bank accommodate the client’s request. The bank followed the recommendation and refunded the client the full amount of CHF 4,500.