Poland allows conversion of franc mortgages

Mortgage woes a central political concern Keystone

The Polish parliament has approved a law allowing homeowners to convert mortgages taken in Swiss francs to be converted into Polish zlotys.

The law will affect around half a million Poles who took out loans several years ago, before the franc soared in January this year. Many mortgage holders were left struggling to repay their debts, valued at some 144 billion zlotys (CHF37 billion).

The legislation will allow people living in apartments and houses no larger than 100-150 square metres to be eligible to convert their mortgages into zlotys at current exchange rates.

Banks will calculate the difference between the current cost of the mortgage and what people would have paid had the debt been assumed in the local currency. Lending institutions would then assume 90% of the difference, which would be covered by state support.

After the Swiss National Bank dropped its currency cap in January, the zloty fell 22% in value against the franc, putting many mortgage holders in difficulty with debt repayments.

The bill will be submitted to the senate, which is controlled by the majority ruling party, Civic Platform, before awaiting approval by the president.

Electoral issue

On Thursday, the president-elect, Andrzej Duda of the biggest opposition party, Law and Justice (PiS), is expected to be sworn in. It is unclear, however, whether he will sign the bill.

Duda’s party had submitted earlier amendments to the bill, which were rejected.

Wednesday’s legislation comes ahead of general elections scheduled for October 25, in which Civic Platform appeared to be slipping in recent polls. The issue of franc mortgages had become central in electoral campaigning.

There have also been growing calls for greater domestic control of the banking sector, which is 62% foreign-owned.