Poland’s Controversy about Law to Convert Foreign Currency Mortgages

Date Published 9/5/2015
Author Marja Hoek-Smit
Theme Housing Finance Policy
Country Poland

September 5, 2015

When the Swiss National Bank decided to drop the peg against the Euro in January 2015, and the Swiss franc soared against the region’s currencies, especially the Polish zloty, many mortgagees of Swiss franc denominated mortgages (estimated at more than 650,000) saw their mortgage payments rise.

Several proposals were made by the banks, government and politicians to deal with the possible rise in delinquencies – in January arrears were only at 3 percent.  In the beginning of August a law was passed by the lower chamber of parliament (dominated by the opposition party) that allowed approximately 20 percent of holders of Swiss franc mortgages to convert their loans into zlotys at the current rate with banks paying 90 percent of the conversion costs. The original text of the law provided for sharing 50/50 the transition expenses between the bank and the client.  Such measure would impose a major costs on Polish banks (even the 50/50 split is estimated to costs the banks $2.5 billion).

On August 28, 2015 Poland’s Senate public finance committee recommended to restore the bill to its original version that split the costs of conversions 50/50 between a bank and a borrower. The upper chamber of the Polish parliament is currently examining the law and will ultimately make a decision. In the meantime, the President wants his Chancellery to form a team of experts, borrowers and lenders to work on a new version of the law.  

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