Posted on 01/30/2015 10:35:35 AM PST by Berlin_Freeper
WARSAW — Piotr Szczepaniak, an apartment manager here, had just finished work, checking faucets and making sure rents were paid. After making himself a coffee, he logged on to a Polish social network and noticed that someone had posted the current exchange rate of the Swiss franc.
“I was frozen,” he said, seeing that the franc’s value had soared that day. Like hundreds of thousands of other Eastern Europeans, Mr. Szczepaniak, 46, is paying off a mortgage he took out in francs, instead of his local currency, the zloty.
In an instant, his monthly payment rose by more than 20 percent when Switzerland’s central bank unexpectedly removed a cap on its currency.
(Excerpt) Read more at nytimes.com ...
She says she is now so far behind on her payments, and feels so trapped by her accumulating debts, that she has contemplated suicide.
A difference in long term lending rates of 3 times is a huge sign that those who make and lose billions of dollars a day betting on what currencies will be worth in the future were saying that the zloty would go down against the Swiss franc more certainly than the Washington Generals losing against the Harlem Globetrotters. And you thought that you knew better? About the only way to take that bet is to get a thirty year loan (with the long, long term predictions on rates) and pay it off in a few years... and even then you are playing with fire. Not a bet I would take.
She's got it backwards. Take it out on those Swiss "Money Changers in the Temple."
And I thought ARMs were scary over the long term...
Why? Did the Swiss force her to take out a loan in a stronger currency? Is it the Swiss' fault their currency is doing so much better than the zloty?
Sounds like she needs to take it out on her own central bank.
You pays your monies, and you takes your chances.
“Before the financial crisis gripped Europe, banks heavily marketed loans in Swiss francs, which were available at interest rates a third as high as for loans in Polish zlotys, or even lower”
So, borrowers were avoiding the high interest rates of mortgages in the home currency and taking out loans with much lower interest rates in Swiss francs. Surely, the borrowers must have wondered why such a large interest-rate differential existed.
O.K. Have it your way.. then she should be pi$$ed at her bank..
My point is you usually "fight" against those that pulled the rug out from under you rather than fold up your tent and die.
In this case the Switzerland central bank unexpectedly removed a cap on its currency. WHY? Probably because they estimated what that would mean in additional interest profit.
That pesky word "unexpectedly" rears it's ugly head once again.
Well surely the people who didn’t make this mistake should be the ones responsible for bailing out those who did...
Or removing the rate cap to protect the interest based cash flow, especially before various national governments force the loans to be converted to the local currency.
Sorry.
How’s That European Union Thingy Workin Out For Ya?
The good news is that we see that making stupid mortgage choices is a human flaw and not just an American one...
That is exactly the anaolgy I was thinking of. This is a lot like an ARM, but worse. It's recklessly gambling with your financial future on a sucker's bet. I told my sons a long time ago that if you can't afford the fixed rate mortgage option, you can't afford the mortgage.
She should have made it payable in gold, because everyone knows an oz of gold is always equivalent to a man’s suit. So all she has to do is buy suits in zloty’s, trade them for gold and make her mortgage payment.
/Goldbug mode off
/Gold Myth mode off
No problem with that since I've done it myself.
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