By Antony Tilney of Foreign Finance

Let me start by saying that I agree completely with the principal of keeping a loan in the same currency as the rent that comes in to support it (and the asset) - but in the current situation I would not personally take a PLN loan for 2 reasons.

1. It is just too expensive at interest rates around 9-11%
2. Historically the PLN / CHF exchange rate was fairly steady with the Polish Zloty gradually getting stronger as the economy was doing well. The global credit crunch has caused wild swings in exchange rates that would not normally happen. Particularly there has been a 'flight to safety' effect which caused stable currencies such as the Swiss Franc (CHF) to be regarded as 'safe havens' in these troubled times, so they became artificially strong.

This has caused huge problems for existing CHF mortgage holders as their equivalent PLN loan value had increased by up to 50%, in most cases removing the possibility of selling the property just when it might have suited some investors to do so to raise funds. But this is a temporary situation caused by the global crisis and as the crisis recedes the exchange rates will return to their previous levels (as they are already starting to do).

The PLN / EUR rate is operating under the same principal, just not quite as dramatically as the CHF effect.

The opportunity...