Brussels, 20/01/2015 (Agence Europe) - The 'Mortgage Credit' Directive (2014/17) contains provisions at EU level to protect individuals taking out loans in a foreign currency after 21 March 2016 (see EUROPE 10918).
Depending on how the individual member states transpose the directive, consumers will have the right to convert their mortgage into an alternative currency and/or will benefit from an upper limit on their repayment obligations, under certain conditions. Banks will also be obliged to inform borrowers taking out loans in foreign currencies of the risks they run, not only at the time they take out the contract, but also if the level of repayments rises 20% higher than the level in place when the mortgage contract was taken out.
The soaring value of the Swiss franc compared to the euro and other European currencies is having negative consequences for the repayment conditions of mortgage loans in the Swiss franc, mainly in Poland and Croatia. In Poland, mortgages in Swiss francs represent nearly 15% of all loans granted to the non-finance sector and 37% of mortgage credit granted to households. Around 550,000 Polish families are believed to be directly affected.
On Tuesday 20 January, the Polish Prime Minister, Ewa Kopacz, called for an investigation into banks based in Poland offering loans in Swiss francs. On the same day, her finance minister, Mateusz Szczurek, the Polish regulator and the banking sector discussed the adoption of possible exceptional measures to help borrowers face the spiralling level of their mortgage repayments.
The day before, Croatia decided to establish a fixed exchange rate between the kuna and the Swiss franc. In 2013, Hungary legislated to force the country's banks to convert more than €10 billion in foreign-currency loans, mainly Swiss francs, into the national currency. (MB)