The recent depreciation of the Polish zloty has hit hard all investors who have mortgages in Poland in Swiss francs (CHF). Their monthly repayments have increased significantly as a result of the fluctuations in the exchange rate.

Moreover, we expect the currency trend to continue at least in the short term. This is mainly because of the growing account deficit, the expected slow down in Polish exports and FDI inflow.

Investors, who are greatly concerned about further exchange rate movements, may want to consider a new mortgage plan from Noble Bank for its existing customers.

The proposition is about setting a maximum monthly repayment for the next 2 years. The maximum monthly repayment is calculated at a preferential exchange rate (currently Noble's exchange rate is 1CHF= PLN2.5 rather than the official exchange rate of 2.84).

That means that in a situation where the monthly installment calculated at the current exchange rate turns out to be lower than the set maximum repayment, a client pays the lower rate.

On the other side, when the installment turns to be higher than the set maximum, the client pays only the maximum and the remaining amount is suspended at zero interest and added to the capital owed after 2 years.

The fee for the arrangement above is 5.45%, calculated on the total amount of loan and this can be added to the existing mortgage.

Such a solution, in broker Jakub Król's opinion is beneficial:

'Such an arrangement should help you to plan and manage your budget at home plus, more importantly, it will allow your cash flow to match your rental income from Polish apartments.'

Additionally, if a client decides to go for this offer, the CHF Libor rate would be corrected to 0.61%, which will lower the interest rate on his/ her mortgage. The current Libor rate in Noble Bank is 2.56% and is going to be revised in March.

The Libor is decreasing as a result of the Bank of Switzerland cutting the base rate in the last few months, but banks revise their rates usually every quarter.

The lower interest rate can obviously partially cover the depreciation of the Polish zloty against the Swiss franc.

Anyone looking at this kind of mortgage would need to consider the numbers carefully, as the fee of 5.45% of the total loan may well considerably outweigh the value of deferring a proportion of the repayments over the two year period.

For example, with the gap between the exchange rate of 2.8PLN to 1CHF on offer at present and with the capped rate of 2.5 from Noble above, you would be deferring about 10% of each payment.

On a 25 year CHF100,000 mortgage at 5.5% the monthly repayment would be around CHF600. So, you would be paying a CHF5,450 fee to delay payment of ~CHF60 per month - roughly equivalent to borrowing CHF1,440 and paying interest of CHF5,450.

This offer could be obtained only through Jakub Król, so if you're interested or want more details please contact Jakub: Jakub.Krol@noblebank.pl