Hi there Folks,

As I am like many others, I have a Polish Property mortgaged in CHF...and as such there is an exposure in the mortgage repayments with this exchange rate - and even longer term with the value of the property being tied to the CHF.

Obviously we are seeing fluctuations in the rate(s) between CHF and PLN and long term Poland will switch to the EURO.

Anyone got any views on the future relationship of the CHF with the PLN and EURO and how this may play out with the value of our loans in CHF?

Could it be worth spreading the risk by remortgaging a proportion of the loan into a different currency?

Just thought I would see what people think.....

Hi...........The CHF is strengthening against most other currencies (the PLN included) because it is seen as a safe haven. (rather than the collapsing pound and dollar for example) This will have worked against you already and the STG or PLN value of your mortgage will have increased and will probably get worse . My view is that the Polish authorities will struggle to maintain their comparatively high interest rates and as they also cut to stimulate the economy there will be a further drop in value of the PLN against the CHF. I would switch my loan into PLN now before this happens. Playing the currency mismatch between rental revenues and assets in one currency and borrowing in another has from time to time shown short term benefits but these things revert to the mean and when they do it is quick and ugly.

David Proud

Ouch thats painful! Especially given that most swiss franc mortgages will also have an early repayment penalty fee.

Ive also been told that polish mortgages are also around 15% which is pretty frightening in itself!

At those rates I couldnt possibly cover my mortgages with the rent, but its like being stuck between a rock and a hard place, the swiss franc is deemed the strongest in europe so if I dont switch and the franc contiues to strengthen then the rent still wont cover the mortgages due to the currency fluctuation.

with base interest rates in the UK at 1.5% I may as well use my GBP money to pay off the mortgages!

Hi

I am also in the same situation and can see that the PLN is likely to depreciate a bit further , but if it is expected that the Polish Authorities will drop the bank base rate, as was in the case of the Uk this is likley to be already priced into the PLN current currency rate , not being up to date with the Polish economy I would expect by the time you arrange to change into PLN the majority of the drop will have occured but I am no expert, I would welcome other view points

I note that in times of uncertainty and poor economics money has flocked to safer havens such as the US dollar and CHF . Once the Polish economy recovers in maybe 2 years it would seam reasonable for the PLN to recover against the CHF particularly as the PLN is expected to join the euro. Also it is not just interest rates which will determine the strength of the currency, investment into Poland is expected to continue as will a positive growth forcast

I have recieved an offer from Noble Bank to fix the rate of the PLN to CHF for 2 years and pay the difference based on the actual rates in 2 time , this would clearly be good for cashflow but the fee is 5.45% of loan value which appears to be expensive for helping cashflow but at a large cost. Has anyone else had this offer and got any views?

I have raised this issue with Nigel at Currency Solutions and I understand he may put something on the PS website in the next 2 weeks in relation to the likley position of the CHF verses the euro

Regards

Paul

Just to let you know, we're working with Nigel to try to pull something together. As I'm sure you can appreciate this isn't an easy task, so please bear with us!

Hi All,

In case you haven't seen it there's now an article on the PS home page on the Noble Bank offer and its pros and cons...

Just a follow up to this and if it's of interest to anyone, I have decided not to take up Noble Bank's offer of fixing my monthly repayment for a 5.45% fee.

My reasoning is that it's simply a deferral at a charge in my case of around £5,480.
I will end up paying around £8,000 total (fee plus deferred payments) based on the CHF hitting 3.0 to the PLN.

Historically (see attached chart) the rate had a high of 3.0 over the last 5 years - I'm banking on the rate not hitting much more than 3.5 this time, and hopefully recovering to around 2.5 or so max.

So therefore I'm deciding to stick it out. My monthly payments will go from around £435 to £735 equivalent if the rate goes to 3.5 - not brilliant but I can cope.

Any thoughts from anyone on this - e.g. am I mad?

Thanks...N

Neil,
Thanks for your post. I have taken the same decision, with fingers crossed that the rate does not far exceed 3PLN:1CHF and goes back down closer to 2.5 within a year or so. Regarding the monthly payments, these may not be as bad as they could be if the bank applies the reduced CHF LIBOR rate over the coming months - this should hopefully compensate for some of the exchange rate differences. Has any one else reached a decision on this?

Hi Alan,

That's something I didn't factor in so even more reason to stick with it.

It could all go horribly wrong however, with the PLN to STG rate being a factor also.

Anyway, I'll take my chances...

Agree with both of you above. I'm sticking with the original mortgage agreement on Garden Heights. Fortunately I'm in the position of being able to fund higher amounts for the time being. The charges on the offer are too high and I resent parting with any more fees to any more Polish institution.... and of course there would be the unending reams of paperwork to contend with probably.....no thanks......