Nearly 10% of Croatian homeowners with mortgages will be forced to pay hundreds of kuna more a month after Switzerland’s shock decision to remove the cap on its Swiss Franc yesterday saw the currency rise 17% against the Croatian kuna…
The Swiss franc rocketed up nearly 30% at one point yesterday after the Swiss central bank ended its bid to artificially hold down the value of its currency against the euro. The rise, which dropped back to a rise of around 15% at the end of the day, spelt bad news for the large number of homeowners with mortgage loans in the Swiss franc. Around 8% (60,000) of Croatian mortgage loans are in Swiss francs.
If the rate holds it will spell pain as monthly repayments have jumped by hundreds of kuna overnight. It is even worse news for those selling apartments today, especially if a large part of the mortgage loan is outstanding as some cases the value of the loan will exceed the value of the property.
Swiss franc loans were for a long time the best credit deal around and a large number of Croatians, Poles and Hungarians in particular took advantage of it in the early 2000s when the franc was weak and interest rates were lower than those for loans in local currencies.
Croatia’s Franak association labelled the currency value jump as a ‘disaster’ and wants the government to take some course of action.