CHF loans & mortgages, customers left biting the bullet.

SeanBM:

I thought that because of the Cradit crunch, many people had bought Swiss Franks and the banks are not lending them now?.

SeanBM:

There seems to be a general consensus that the Zloty will go back up, That the dip is due to people not knowing where Hungry is (East Europe) and therefore it effected neighbouring countries, is this why you are saying that it is a great time to borrow in Swiss Franks? Because the Zloty will rise against it?.

Wroclaw Boy	Edited by: Wroclaw Boy Dec 13, 08, 05:51 / #
Ive been looking over exchange rate figures over the past year or so and have discovered that many clients who took out Swiss Franc (CHF) loans or mortgages must be furious at the moment. Up until recently mortgages were easily accesible in Poland, mortgages were available in CHF, PLN, GBP or EUR. 90% of mortgages were denominated in the CHF currency as it carried with it the lowest interest rate. If youre taking a mortgage and the currency of which you borrow is different to that of your income there will always be an exchange rate gamble, if only investors had a crystal ball I think they would have thought twice. Lets take for example a CHF loan of 250,000 taken out 4 months ago: that figure would have got you 492,500,000 PLN, at the current exchange rate its 627,000 PLN. So if you bought a house 4 months ago and sold it now you would need to have 134,500 PLN equity to break even. Take monthly repayments on the above figures 250,000 CHF over 25 years 1,629 per month, but of course if you bought in Poland you would be paying in PLN so 4 months ago that would be 3209.13 PLN but at todays exchage rate you would be paying 4,064.000 PLN. The above does not even take into consideration interest rate hikes which are occuring in Poland right now. The message is... if you manage to get approval for a CHF loan in Poland right now, snap their arm off!! You'll be quids in.

Wroclaw Boy	Dec 14, 08, 05:55 / #
Anybody out there with Swiss franc loans paying over the top? There should be thousands, these exchange rate gambles have the potential to begin a repossession fest.

SeanBMThreads: 41 Posts: 8,726 Joined: Mar 10, 08	Edited by: SeanBM Dec 14, 08, 06:22 / #
Wroclaw Boy: The message is... if you manage to get approval for a CHF loan in Poland right now, snap their arm off!! You'll be quids in. I thought that because of the Cradit crunch, many people had bought Swiss Franks and the banks are not lending them now?. There seems to be a general consensus that the Zloty will go back up, That the dip is due to people not knowing where Hungry is (East Europe) and therefore it effected neighbouring countries, is this why you are saying that it is a great time to borrow in Swiss Franks? Because the Zloty will rise against it?.

Wroclaw Boy	Edited by: Wroclaw Boy Dec 14, 08, 07:18 / #
firstly thanks for rescueing my sad thread SeanBM: I thought that because of the Cradit crunch, many people had bought Swiss Franks and the banks are not lending them now?. Swiss Franc mortgages and loans were the currency chosen by the borrower as they had the lowest exchage rate, usually they beat the nearest currency the Euro by 2%. The Zloty was the most expensive by around 5%. Personally I never realiesed borrowing in foreign currencies to that of the country you were buying property in to be that common. I know for a fact that 90% of mortgages/loans handed out over the past three years were in the CHF currency. I dont know what kind of arrangement exists between Swiss and Polish banks at the moment but it seems that the deal is not so sweet anymore. Looking back the Zloty was abnormally high in relation to the Economic power of Poland Im not so sure if the Zloty will claw its way back against stronger currencies. Safe to say that most mortgage holders of CHF loans are stuck in a meat grinder, hoping and praying that the PLN gains its strength back. The whole issue just highlights financial disaters which may befall us at any time, the need for due dilligence and a good fortune teller if possible. SeanBM: There seems to be a general consensus that the Zloty will go back up, That the dip is due to people not knowing where Hungry is (East Europe) and therefore it effected neighbouring countries, is this why you are saying that it is a great time to borrow in Swiss Franks? Because the Zloty will rise against it?. Well yeah, one would think the Zloty cannot weaken much more so it should come back somewhat. Borrow a strong CHF in Polish Zloty currency and pay back a weak one and the profits can me substantial.

SeanBMThreads: 41 Posts: 8,726 Joined: Mar 10, 08	Dec 14, 08, 09:24 / #
Wroclaw Boy: I know for a fact that 90% of mortgages/loans handed out over the past three years were in the CHF currency. Agreed. Wroclaw Boy: the need for due dilligence and a good fortune teller if possible. Ha ha ha,more fortune cookies. Wroclaw Boy: Borrow a strong CHF in Polish Zloty currency and pay back a weak one and the profits can me substantial. Buy low and surf in. I do not know much about how currency is effected. I have lost money and I have "gained" money on weak or strong currency exchanges. I try to keep up to date and have a rough idea of where the Zloty is but usually when I am borrowing or exchanging money,it has nothing to do with the currency exchange rates. It has to do with me needing the money or needing to exchange it. When is England joining the Euro?ha ha ha ha ha ha

Wroclaw Boy	Dec 15, 08, 07:58 / #
SeanBM: When is England joining the Euro?ha ha ha ha ha ha Good question. Ive got a few new £20 notes upstairs, they are massive compared to the 100 Zloty note or the 50 Euro note. I never realised that before and the Fifty is even bigger too big to fit in the standard wallet. Euro's are not graphically pleasing, long live the Pound. Wha wha wha..

SeanBMThreads: 41 Posts: 8,726 Joined: Mar 10, 08	Edited by: SeanBM Dec 15, 08, 08:20 / #
I can't see England joining, well it would be the politicians, not the people, who would make the change over. Youz seem to love your over sized notes ha ha ha. I have not used Euros in work for over 6 years. I am so used to Litas and Zloty, everything else looks like funny money, monopoly stuff. Wroclaw Boy: Euro's are not graphically pleasing, long live the Pound. The nicest note was the Dutch Gilder, big colourful flowers on them. Or in South Africa the more value the note has the more ferocious the animal on it. I think it starts off with spring bok (a deer) and works it's way up through hippos and then to lions, something like that ha ha ha ha, (not exactly)

HarryThreads: 62 Posts: 8,508 Joined: May 2, 07 [Suspended]	Dec 16, 08, 07:40 / #
Wroclaw Boy: Anybody out there with Swiss franc loans paying over the top? There should be thousands, these exchange rate gambles have the potential to begin a repossession fest. My ever-intelligent ex took out a 110% loan in June for a property which cost 330,000zl (plus fees etc). Her mortgage is currently about 475,000zl and the property is now worth 300,000zl. Luckily she can afford the higher repayments so she isn't in a bad situation. In fact she should probably go to the bank and get them to offer her a lower interest rate on the basis that either they can lose a little money or she can hand back the keys and they can lose the full 175,000zl!

SeanBMThreads: 41 Posts: 8,726 Joined: Mar 10, 08	Dec 16, 08, 07:43 / #
Harry: took out a 110% loan in June for a property which cost 330,000zl If you do not mind, Harry, Where and what type of property was it?

Wroclaw Boy	Dec 16, 08, 07:58 / #
Harry: In fact she should probably go to the bank and get them to offer her a lower interest rate on the basis that either they can lose a little money or she can hand back the keys and they can lose the full 175,000zl! Not a bad idea as long as theres no redemption involved. I think one bank has just slashed interest rates by 0.75% I'll have to check it.

Wroclaw Boy	Mar 13, 09, 16:50 / #
Almost a 2% slash in CHF mortgage rates recently by Dom Bank. These guys are absolutely crapping themselves of being loaded with negative equity properties. Its a forgone conclusion, this bank will not survive!!

HarryThreads: 62 Posts: 8,508 Joined: May 2, 07 [Suspended]	Dec 17, 08, 08:19 / #
SeanBM: If you do not mind, Harry, Where and what type of property was it? Two room apartment in Warsaw. Wroclaw Boy: Not a bad idea as long as theres no redemption involved. I think one bank has just slashed interest rates by 0.75% I'll have to check it. Screwing the bank out of cash is always a good idea!

DanniegoThreads: - Posts: 4 Joined: Jan 3, 09	Jan 3, 09, 12:18 / #
I've seen it many times now with my family in Italy (when they had Italian Lire as curency) and friends in Poland. Borrowing money in another currency then you are earning your money in is not a good option imo. In the beginning it looks smart and promising. In the end they all reached feelings of desperation to say the least. When you have to borrow money borrow it in the currency you make the money to pay off the loan. Even if the interest rate is higher then the that of the "cheap" currency. Be also very carefull reading the small hidden cost and how the loan is structured. The interest looks low on paper but the hidden requirements like life insurance, closing fees, etc. are adding up quickly. Reminds me of a joke........ The man borrowed 25 million Euro from a local bank for a sure thing project and it went wrong. On monday he have to pay the money back to the bank. It is sunday night an he is worried, sweating and can not sleep because he can not pay it back. At 3 oclock he calls up the bank manager out of his bed. "Yeah, well sorry for calling you that late but I can not sleep. I have to pay tomorrow the 25 million euro back..well I can not pay it back to you." The bank manager replies: "What! know what then!?" Him: "Now I go to sleep and you worrie and sweat around all night!!!!" and he hang up the phone. Danny

SeanBMThreads: 41 Posts: 8,726 Joined: Mar 10, 08	Edited by: SeanBM Mar 13, 09, 17:52 / #
Haven't the Swiss been lowering every quarter (as often as is allowed) over the past 6 months or so?. And Dom bank have done nothing till now and hence the big fall of 2%?. That is the way I have understood it but I would like to hear alternatives. Although Dom Bank may be in trouble because they were more willing to give 110% mortgages than most.