Auf wiedersehen franc?

Mortgages in foreign currency became very popular in Poland a few years ago, as they offered customers lower interest rates and - at least before the credit crisis - were a theoretically safe option. Among foreign currencies, the Swiss franc proved most popular for Polish mortgage-takers.

But this has changed. Banks are now finding it difficult to supply the Swiss currency and the Polish Financial Supervision Authority has advised them to cut back on mortgages denominated in foreign currencies, especially francs.

Other than the franc, the dollar and euro are also relatively popular currencies in Poland. Some are now questioning which will prove more attractive with Poles in view of the financial crisis.

"When it comes to the dollar, low interest rates - in this case LIBOR - could provide an interesting option for customers. But we must also stress that the euro zone hasn't said the final word yet when it comes to cutting interest rates," said Robert Wasilewski, Credit House Polska's vice president for sales and marketing.

Mortgages in both currencies have their pros and cons, and both carry risks. But Wasilewski suggested that the battle between the euro and dollar could be won by Poland's future currency.

"Polish people are much more connected with the euro, not only because of our geographical closeness but also because recently it has been a very stable currency. The financial crisis hit the US the hardest, so exchange risk with the dollar might be higher," Wasilewski commented.

The expert also forecast that because Poland might join the euro zone in 2013-2014, it will soon join the ERM2, the "waiting room" mechanism which guarantees a more stable złoty-euro exchange rate.

In the mortgage world, five or six years is not long. Prospective property-buyers may also be attracted to the euro by the fact that their incomes will be in the same currency as their mortgage in the future.