Swiss franc loans are suffering

People who took out Swiss franc-denominated loans in recent years, lured by the smaller nominal interest rates displayed by banks, are now seeing themselves having to pay increasingly higher instalments as the exchange rate is hitting all-time highs. The franc is now 28% stronger against the RON than in late 2008 and 57% higher than in December 2007.

The rising exchange rate is directly visible in the value of monthly instalments when denominated in RON, and the brisk pace at which it went up in 2010 is already visible in the rate at which overdue payments rise.
The population in November had outstanding instalments worth the equivalent of 172m euros for Swiss franc loans, six times more than a year before, according to NBR’s latest data.
The franc’s growth against the RON comes as a result of international market movements, with major investors seeking the safety of Swiss assets. Thus, the franc stands at all-time highs against the euro and this indirectly translates into the exchange rate against the RON.
Some clients are now mulling changing the borrowing currency, but they are in for surprises.