Government to Step in and Help Croatian Swiss Franc Mortgage Owners

The Croatian government will step in to help out around 60,000 homeowners who were affected by the skyrocketing Swiss franc last week…

Prime Minister Zoran Milanović told those with mortgage loans tied to the Swiss franc that they could rest easy as he gave his guarantee that the government would work out a solution with the banks.

“They can go out tonight (and spend) and then sleep easy. I give my guarantee that we will work out a solution,” Milanović said during a televised interview.

Whilst the current exchange rate of the Swiss franc to the Croatia kuna is 7.54 kuna, and expected to rise further, a deal brokered by the government and banks could see the Swiss franc fixed at 6.39 kuna, reported Croatian Radiotelevision.

Croatia’s Minister of Finance Boris Lalovac has already met with representatives from the leading banks trading in Croatia and a deal is expected to be announced next week.

To recap, Switzerland last week removed the cap on its Swiss Franc to the euro which saw the currency rise 17% against the Croatian kuna in 24 hours. The rise 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.

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.