EU court backs Polish consumers over Swiss franc mortgages
People who took out mortgages in Swiss francs protest in front of the presidential palace in Warsaw, Poland in January 2015
Keystone / Alik Keplicz
Polish consumers who took out mortgages in Swiss francs can ask national courts to cancel those contracts, the European Court of Justice (ECJ) ruled on Thursday.
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Reuters/AFP/sb
An estimated 700,000 Poles who have taken out mortgages in foreign currencies since 2000, mainly in Swiss francs, are now paying far bigger instalments than they expected after the Swiss franc soared against the local zloty currency following the 2000 financial crisis and again in 2015.
Thousands of people had challenged their contracts and the clauses on how banks calculated the repayments.
On Thursday, the ECJ ruled that unfair terms in Polish mortgage contracts could not be replaced by general provisions of Polish law. It added that, if removing these unfair clauses changed the original contracts in a way that was inadmissible under Polish law, EU law did not preclude them being annulled.
It is thought this long-awaited ECJ decision will allow consumers to ask local courts to allow their mortgage’s conversion into the zloty.
“The position of Polish consumers who took out Swiss franc-denominated mortgages was strengthened by the ECJ ruling,” Polish Finance Minister Jerzy Kwiecinski told reporters.
An estimated 500,000 loans in Swiss francs, or 20% of all mortgage loans, must be repaid, amounting to over 100 billion zlotys (CHF25 billion).
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Franc mortgages cause pain in Europe
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The craze of accumulating debt in francs has also left banks in many countries exposed to defaults and even affected communities in Austria that unwisely speculated in currency exchange rates before the financial crisis. Swiss franc mortgages were commonplace in countries such as Hungary, Poland, the Czech Republic, Romania and Croatia before the 2008 economic…
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The practice of taking out franc loans has been rife in countries such as Hungary and Poland where interest rates are traditionally higher and the local currencies are relatively unstable. It is estimated that more than half of mortgages taken out in Poland in recent years have been in francs while the vast majority of…
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