Info Point for Migrants

Multicultural Centre in Warsaw (Centrum Wielokulturowe)

54 Jagiellońska St
(entrance from the Haller’s Square)

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tel.: 048 666 600 566

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One day I was talking to my Polish friend, he said that I’m not a Pole, but then he asked me did I know what we have in common, what got us sleepless nights? Well he said it is Swiss franc mortgage. He had a point there. I am not a Pole, either Hungarian nor a Croatian or an Austrian. But I still have got entangled in this Swiss Mortgage Trap – thanks to globalization.

No doubt! Buying a property is a risk especially in a foreign land, and with the currency speculation on top of it is even more risky. People who do both transactions make themselves vulnerable to these risks. We were the ones among them. Were we foolish or greedy to opt for these loans? No! When we took the mortgage loan in 2008 we had no global crisis on the horizon and also for the past 50 years of history indicated Swiss Franc as one of the most stable currency and at first Zloty was strengthening, which rather looked appealing. Why would anyone go for the high interest Polish Zloty Mortgage loan then, when Swiss Franc Mortgage Loans were so lucrative.
One takes the good times and the bad, we definitely benefited from the low interest rates where as others who had loans in Zloty’s had to buy at higher rates.

Now the people are debating about the state aid but why should other tax payers and the rest of those who have mortgages in Zlotys subsidize those who have taken a currency gamble? The answer is not who gambled, but the point is how the banks using aggressive marketing strategies sold these risky mortgages to the customers without warning about the risks involved in the deal – this was the one of the major factors triggering the financial crisis around the world.

As a home owner what options do I have on the table?

1)       Do I need the wait for the government to come to my aid by converting my Swiss Franc loan to Zloty’s as the Hungarian government did? I doubt this will happen since Polish loans are not as bad as their eastern European counterparts. At the moment only about 3% of Poles are in arrears. That's partly because Polish banks tended to offer Swiss franc loans to wealthier borrowers.

 

2)       Do I need to fear and spend sleepless nights? No, it is not sensible to do so. Mortgages are not the things which should be decided in haste, take a step back and think. Even today Swiss Mortgage loans are cheaper than the Zloty equivalent as in the past. Thanks to the very low interest rate. Also, I understand the exchange rate is rather appalling but the crucially the interest rates are significantly low. Having said that, I also feel sorry for those who are struggling to pay back their mortgages due to rise of Swiss Francs.

 

3)       Can I sell my property once and for all, and get rid of the loan? Unfortunately, this cannot be done and is not the right choice now, unless you want to make some loss, since the property is not worth than much as the actual loan I owe to the bank.

 

4)       If you are a foreigner another option is to rent the property out. You can do this by giving your property to property management companies for a very small nominal fee, which can cover your monthly installments to large extent.

 

5)       The last but not least, the best thing what can be done is (which we are currently doing) to anyone who have a Swiss Franc mortgage is to have a separate Swiss Franc bank account and exchange your Zloty each month online or in a local currency exchange office (Kantor), which is much better than the rates which we get from the banks which is nothing but cutthroat.

 

It is also worthy to note that policy makers have ordered the banks should abide by a pain sharing agreement, like passing on the Switzerland’s negative interest to borrowers and refrain from demanding additional collateral and extended loan maturities for clients having difficulty with debt payments. The banks who have been demanding extra security fees to cover their risk in the past cannot do that anymore. One last thing, as the saying goes “As the going gets tough, tough gets going.” Just don’t give up.

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