Polish Supreme Court hearing on Swiss franc mortgages postponed
Poland’s supreme court has postponed to May 11 a meeting on Swiss franc-denominated mortgages originally set for today.
The meeting was scheduled to issue guidance on how Poland’s lower courts should rule on franc-backed mortgage disputes between Polish banks and borrowers. Over twenty percent of Polish borrowers have franc-backed mortgages, as the loans initially carried lower interest rates than those backed by Polish zloty. However, the franc’s appreciation over the past decade—together with the zloty’s decline—has left many borrowers in Poland unable to meet their debt-servicing obligations. In late 2019, the court held that borrowers may request a conversion of foreign currency loans to zloty. Yet, lower court decisions have favored lenders, who maintain that conversion of the outstanding $32 billion in franc-backed mortgages could harm Poland’s financial sector.
Expect Poland’s supreme court to guide lower courts to decide for borrowers in cases involving franc-backed debt, as Poland must implement a 2019 European Court of Justice ruling permitting conversion requests. Further, though Poland’s government has expressed willingness to support banks through the conversion process, in frustration over the collapse of negotiations meant to settle the dispute, Polish officials have indicated that bailouts are improbable.
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