Coronavirus pandemic has double impact on CHF denominated mortgages

Thanks to the interest rate cut by the Monetary Policy Council (RPP), people who repay loans in PLN pay lower installments. The holders of mortgages denominated in the CHF are in a worse situation, as the Swiss currency has achieved the highest rates in history, which translated into an increase in liabilities due to repaid loans. In the event of job loss or pay cuts, they can only count on credit holidays, and this is only a temporary solution to the problem and, in addition, expensive.

“Due to the collapse of the market, it can be assumed that the repayments of franc loans will deteriorate. More and more people are suspending their business activities, complaining about reduced pay or losing their professional position. Some borrowers, including franchise holders, may lose their liquidity, which will result in the solvency problems,” Wioletta Miros from the Czupajło & Ciskowski Law Firm, said.

The Swiss currency exceeded the level of January 2015, when the Swiss central bank released the exchange rate, causing a panic reaction of markets and a sharp increase. In March the franc went up by about PLN 0.25 to PLN 4.3.

“A borrower who has an installment of CHF 1,000, must additionally pay PLN 250 per month. At the moment, when everyone is struggling with the problem of employment or reduced salary, it is a large amount,” Miros added.

As she emphasizes, those people cannot count on help from the state. There is no legal act that would regulate the matter of repayment of installments during a pandemic. Such a solution was introduced, e.g. in Hungary.

(Newseria)