Since the onset of the global financial crisis, the value of the Swiss franc is on the rise. In recent weeks, the Swiss currency has experienced a particularly strong increase in value: More and more investors flee from the US dollar and the euro – most of the funds are exchanged in Swiss francs. This development has led to a significant appreciation, which meanwhile also causes serious difficulties for many property owners.
Foreign currency loan in real estate financing
Affected are owners who have opted for a foreign currency loan in real estate financing. Most loans of this type, which are taken up by German builders and buyers, are denominated in Swiss francs. Originally, the loans were so popular because they were able to score with very attractive interest rates – but now they have become a financial problem for many people.
Sometimes difficult to spend the required money
Because the loan accounts are kept in Swiss francs, borrowers from Germany have a problem: they have to spend an increasing amount of money to service the loans. For some borrowers, it is tight: the rates have increased significantly, so it is sometimes difficult to spend the required money. But that’s not the only problem: Converted into euros, the remaining debt amounts have risen – in some cases, they are already above the original amounts, which were at loan completion.
They come through these times
The affected borrowers now have to watch as they come through these times. Especially if the appreciation of the Swiss franc continues, it will be difficult to repay the loan on time. A conversion into euros is possible after expiry of the fixed interest period. However, this could be an expensive treat – possibly making it even more sensible to hope for a strong recovery of the euro.