Do you refinance a foreign currency loan?

The Act “On amendment to the Banking Act and some other acts”, in force since August 28, says directly that “the borrower may repay principal and interest installments and make early repayment of the full or partial loan amount directly in this currency”.

Foreign currency loans

Foreign currency loans

This approach definitely improves the position of people who repay foreign currency loans. Certainly, it is easier to refinance debt in such a situation, and when the bank is aware of it, it talks in a completely different way with a client who wants to renegotiate some contract terms.

Take, for example, a loan from a person who had a debt in euros last summer at klr Merd. To get 300,000 PLN, she bought from the bank (at the then 3.84 PLN purchase rate) over EUR 78 131. After a year, it has to donate approx. 76.4 thous. EUR. If she would like to go to the competition with such a loan, she would have to pay it back in PLN. klr Merd would recalculate the loan at its Euro sale rate, i.e. 4.28 PLN per euro and would demand 327 thousand. zł. A new bank, e.g. Raiffeisen, would divide 327,000 PLN loan at its euro buying rate (4.034 PLN) and after the entire operation the client would owe more than 81 thousand to the new bank Euro, instead of the previous 76.4 thous. EUR.

Debt in euros

Debt in euros

Currently, the customer simply transfers the amount of debt in euros that he has to pay, i.e. in our case approx. 76.4 thous. CHF. The difference is 5,000 euro. It is about 7 percent. the value of the amount transferred by the example customer, i.e. the amount equal to the average value of the difference between the rate of buying and selling euros at banks.

Such a scenario was also possible earlier under Recommendation S. But only people who signed a paid annex to the loan agreement could afford it, and in some banks its price was prohibitive.

So much theory. In practice, people with franc loans would have nothing to look for refinancing on the market. First of all, they would probably not have obtained a lower margin than the one they have, and secondly it would be difficult to find a bank, ready to grant a loan significantly exceeding the value of collateral, and in such a situation, due to the increase in the value of the franc exchange rate, we are currently dealing with. Meanwhile, people with a loan in euros can seriously consider ways to reduce their installments and go to an institution offering a lower margin that does not require expensive insurance.

Of course, the customer must remember that refinancing a loan requires a new path through the credit path, as well as incurring many additional costs, even when it is no longer related to the spread.

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