The installment of the same mortgage during the bull market in the real estate market before 2008 could have varied by as much as half. It all depended on whether the borrower chose a loan in PLN or in Swiss franc.
There were months that every ninth person chose the second, theoretically cheaper option. Today, supervision severely limits access to foreign currency loans. Is that right
Currency mortgage loans were once sold just like fresh rolls
It is enough to look at the central bank statistics to notice that, for example, in 2008 the amount of loans equal to: PLN 57 billion as much as 70% was in foreign currency loans. In the following year, over 73% of loans were granted in PLN. The latest version of Recommendation S will estimatedly limit the ever more modest currency loan market by another 15%. Are surveillance activities late or unnecessary?
It would not be the whole thing if not for the fact that the cost of servicing the loan in francs, euros or dollar depends directly on the condition of our currency. The change in the value of the Polish zloty, converted for example into the Swiss franc, is reflected in loan installments and the balance of debts after conversion into the domestic means of payment. Frank credit holders know this very well. The option of repayment in “equal installments” in their case has nothing to do with “extremely uneven” monthly wallet depletion.
Painful currency lesson Borrower
who chose a loan in the Swiss franc in mid-2008 after almost three years of paying back installments up to half more to give than he borrowed. An example buyer of a flat for PLN 300,000, financing the entire transaction from a loan, is owed to the bank, at current exchange rates, over PLN 420,000.
If he chose a loan in PLN, his debt would be today around 275 000 PLN … The exact calculations regarding the change in the level of the debt balance for loans in francs taken in the years 2006 and 2008 are presented below in the table and on the chart:
Not only the balance counts
When exploring the example under consideration, it should be added that the person paying back the franc loan has so far spent about PLN 58,000 on servicing installments. A person repaying an analogous PLN loan paid the bank less than PLN 72,000 at the same time.
And this is due to the lower interest rate of the currency variant. Interest rates in Switzerland remain close to 0, while in Poland market rates above 4% apply! Warning! If such conditions were maintained until the end of the 30-year loan repayment, the franc option would be only several thousand more expensive than the PLN option. The total costs of servicing both liabilities would be PLN 550,000 and PLN 538,000, respectively.