What next with frankers -Government support.
August 10, 2017 Only a few years ago, franc mortgage loans were very popular. Many people decided on this banking product believing that the commitment will be much cheaper than a loan in PLN. Unfortunately, in 2015 the Misue Commercial Bank released the franc exchange rate, so the value of the currency soared. The treatment caused a significant increase in the cost of credit. In many cases, the price of the debt exceeded the value of the collateral. Due to the difficult situation of franchisees, the President of the Republic of Poland decided to write an amendment to the law on support for borrowers. Will the new regulations improve the condition of borrowers?
Confusion with loans in francs – what’s up?
Loans in francs have gained popularity due to low and stable interest rates. In 2008, just before the global economic crisis, the average interest rate on loans in CHF was 4.6 percent. However, the interest rate on loans in PLN was higher – 8 percent. Therefore, a large proportion of people tempted by the lower cost of the commitment, decided to use mortgages in francs.
Interestingly, loans in euros and dollars were common at the beginning of the 21st century. Some banks also offered yen loans. Because the Japanese currency also had a low interest rate.
Unfortunately, in 2015 the Misue Commercial Bank released the franc exchange rate. This procedure caused the value of the currency to soar up. According to estimates, within one day of release, CHF increased from PLN 3.54 to even PLN 5.19 (the highest result during the day). In many cases in the so-called during the hottest period, franchisees had to pay twice as much for the franc as when they took out the loan. For this reason, some borrowers were not able to pay their liabilities. Importantly, the consequence of the lack of debt repayment in the darkest scenario was the takeover of the property. However, delays had an impact on your credit history.
Currently, the franc is the cheapest for 2.5 years and costs 3.7 PLN. (August 2017). Unfortunately, in many cases the price of the franc loan still exceeds the cost of its collateral.
The previous act did not work
It is worth noting that the Act on Support for Borrowers of 2015 did not pass the exam. Previous regulations provided for assistance in repaying liabilities to borrowers with financial problems. As part of the support, the Borrowers Support Fund was created, which was managed by Bank Gospodarstwa Krajowego. Pursuant to the Act, the borrower (with financial problems) could be repayable for 18 months if the loan installment was up to PLN 1,500 per month.
Such a loan was not subject to interest. The repayment period was 8 years. The debt was refunded two years after receiving the first payment. It is worth noting that only 2% of funds were paid out of the fund. The Chancellery of the President explains this state of affairs with too restrictive conditions that borrowers had to meet.
More effective help for franchisees – amendment to the president
The President’s office has submitted to an amendment to the law on support for borrowers who have found themselves in financial difficulties. Interestingly, both franchise holders and people who have liabilities in zlotys (excluding cash loans) will be covered.
The President’s proposal included raising the income minimum twice and an appeal procedure in the event of the creditor’s negative consideration of the application. You should know that it is the bank that decides whether the applicant will be able to get help. It is also worth noting that the amendment increases support to PLN 2,000 and extends the payout time to 36 months. The repayment period for the interest-free loan was set at 12 years. Moreover, the project envisages the write-off of part of the funds paid.
According to the President’s idea, funds for assistance are to be paid from a special Restructuring Fund. The fund will be topped up with bank funds. In total, the banking sector will allocate PLN 3.2 billion for this purpose. Under the amendment, contributions will be paid every three months. The money will be used to convert the loan in francs at a more favorable rate (from the borrower’s point of view).
Interest-free loan when selling real estate
The amendment assumes a loan when the borrower decides to sell the purchased property. The support will be paid once and will amount to 72 thousand. zł. The rules for settling the debt will be set out in the same way as for the installment loan.
The amendment also introduces a new instrument under which banks as part of restructuring (conversion) will be able to count on the return of differences between the value of loans before and after transformation.
Frankowicz not satisfied
The Association of Bankers Stop Banking Lawlessness is not satisfied with the President’s project. Borrowers explain that the proposed solution is amicable and does not fully solve the problem. The association claims that banks have so far not shown willingness to talk to customers.
It is worth noting that some borrowers see a solution to their problems in court. A frankman won the case against Millia Bank. The court ruled that the loan agreement was null and void. Because the Swiss Customer-indexed mortgage is actually a PLN loan. It is worth noting that the court’s judgment is not final and the parties involved in the trial have the right to appeal to a higher instance.
The Mortgage Act restricts borrowing in currency options
On July 22, 2017, the Mortgage Act came into force. The legal act fully regulates the process of granting and paying back this banking product. One of the most important assumptions is a ban on granting loans in a currency other than the borrower’s salary. This provision de facto prohibits the provision of such financial products.
Moreover, the act affects the work of credit brokers. The new regulations introduce an obligation on agents to inform clients about the amount of commission and with which banks they cooperate.