There are a group of people who are going to be paying (if they can… and I reckon that’s a big if) for the Swiss National Bank’s turnaround in policy on Thursday.

From Bloomberg:

  • Many Poles and Hungarians opted to borrow in francs in the run-up to the 2008 financial crisis because loan rates were lower than for local currencies. Their payments increased as the franc appreciated against the zloty, forint and leu in all but one of the past five years.
  • “Massive Swiss franc appreciation is extremely bad news for foreign-currency borrowers in central Europe,” Michal Dybula, an economist at BNP Paribas SA in Warsaw, said in an e-mailed note. “It will make servicing franc loans more expensive, reducing disposable income and hurting consumption. That’s bad news for growth and the banking sector as the non-performing ratio of Swiss franc mortgages is likely to increase.”

How much has the Swiss franc appreciated, so pushing up the cost of servicing these mortgages?

Again, from Bloomberg:

  • Poland’s zloty weakened 15 percent to 4.1533 against the the Swiss currency by 5:56 p.m. in Warsaw
  • Hungary’s forint and the Romanian leu tumbled to records

The extent of the problem varies by country … ut for Poland …

  • Lenders had 131 billion zloty ($35 billion) of Swiss-franc mortgages on their books as of the end of November, 46 percent of total home loans, according to data from the country’s financial-market supervisor.

Unless your earnings are in the foreign currency (and I don’t imagine many Poles, Romanians or Hungarians are paid in CHF) then taking out a mortgage in that foreign currency is rarely a good idea.