Thursday, Jan 15, 2015

What can i say

Yahoo: Polish zloty tumbles 20% against Swiss franc over mortgage fears

It also soared nearly 20 percent against the Polish zloty, which is bad news for some 700,000 Polish households that hold mortgage loans in Swiss francs

Posted by mark @ 02:34 PM (16911 views)
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21 Comments

1. hpwatcher said...

''Smash the UK housing cartel''

Thursday, January 15, 2015 02:39PM Report Comment
 

2. mark said...

Some 60,000 Croatians have loans in Swiss francs and the Franak association that estimates that the move could affect lives of up to 300,000 people.

uk.finance.yahoo.com/news/croatian-borrowers-soaring-swiss-franc-154519662.html

Thursday, January 15, 2015 03:53PM Report Comment
 

3. libertas said...

BUT, BUT BUT, How about all those in the Eurozone with Swiss Franc mortgages?!?!?!

They have fared thirty percent worse than Poles who have seen a Zloty rising significantly vs the Euro. These Poles would be FAR, FAR worse in the Eurozone, and have partially insulated themselves. However, they have been complete fools thinking that the Euro Swiss Franc peg would hold, and the Polish government should have banned such mortgages. Most likely, EU rules prohibited such restrictions.

This is dynamite. Eurozone now has a Swiss Franc backed mortgage crisis to add to Greek woes. Plus, the Swiss central bank now has trillions of Euros in reserves that are becoming worthless by the minute. Do I smell treason in the air? Swiss central bank conspired with a foreign power to prop up the Eurozone at huge expense to the Swiss people, much like Britain with the ERM. Could Switzerland need to go for an IMF bailout now?

Thursday, January 15, 2015 04:36PM Report Comment
 

4. libertas said...

Oh, actually, wasn't the British experience worse? The pound dropped on exiting the ERM, so likely, rising Swiss Frank reserves should more than counterbalance falling Euro reserves for the Swiss Central Bank.

Thursday, January 15, 2015 04:37PM Report Comment
 

5. britishblue said...

I actually have a Swiss francs mortgage on my property in Poland. I think It was around 2.24 to sterling when I took the loan and today is around 1.36 from 1.55 yesterday. However it has been in the mid 1.40's for sometime. My mortgage is only 20% of the property value, but it still hurts. People in Poland have already been suffering badly because the zloty has depreciated because or potential contagion from Ukraine and is 10% less against sterling than it was a year ago.
The pound has now appreciated 30% against the Euro's in the last 6 years and all indications are that the Euro is in for a bigger decline. Could this mark the end of the wealthy Europeans buying in central London? Given both the property appreciation in London and the appreciation of the pound, London is now looking very expensive. I do wonder how many of them are looking to repatriate their profit back to Eurozone at the appropriate time. There must be a few Greeks that are thinking of cashing in and buying in Greece if the drachma comes back in at a hugely depreciated rate.

Thursday, January 15, 2015 05:03PM Report Comment
 

6. hpwatcher said...

London is now looking very expensive


In recent years, has it ever looked cheap?

Thursday, January 15, 2015 05:44PM Report Comment
 

7. hpwatcher said...

Another point:-

Could this mark the end of the wealthy Europeans buying in central London?

The currency has fallen terribly today; what would be the point of crystallizing your Euro losses and piling the money into the UK? You'd wait for the currency to recover.

The answer therefore is yes, I believe; so the end of wealthy Europeans buying in central London.

Thursday, January 15, 2015 05:47PM Report Comment
 

8. sneaker said...

And it's not just the Poles.

Any Russian oligarch who
1. owns assets in Russia (e.g. energies, mining)
2. pledged them to a Swiss bank
3. borrowed CHF against them
4. sold these CHF to buy foreign assets (e.g. insanely priced London property, real estate in Dubai)

now faces
1. drop in Russian assets - commodity crash, recession
2. collapse in Rouble - sanctions
3. CHF rise of up to 30% in one day - makes servicing loans harder
4. margin-call from Swiss bank
5. need to sell foreign assets to cover margin-call
6. forced sales by other overseas asset-owners
7.growing threat of government action against property "super-bubbles"

Suspect that the London bubble is over and ended back in May 2014.

Thursday, January 15, 2015 06:24PM Report Comment
 

9. libertas said...

Oh Contraire. You are thinking logically, but markets are driven by SENTIMENT.

During recent weeks, London property has soared in value relative to property in the Eurozone (Irish property probably exempt), and people tend to buy into a rising market. They will only sell their London properties once the Euro starts to gain against Sterling, but the Euro is clearly in a secular bear market against all other currencies, save maybe the Zimbabwean Dollar.

Thursday, January 15, 2015 07:16PM Report Comment
 

10. khards said...

It's all looking quite promising for the French booze run. Diesel is down and the pound is up.

Thursday, January 15, 2015 07:49PM Report Comment
 

11. wdbeast said...

khards@10 Good to see some clear rational thinking!

Thursday, January 15, 2015 08:04PM Report Comment
 

12. britishblue said...

Libertas @ 9 I think you need to read Sneakers @8 very clear example to see the other side of the coin.

Thursday, January 15, 2015 11:00PM Report Comment
 

13. reticent said...

@8

Sounds plausible. But will the Italians and Greeks be trying to offshore Euros?

@9

Prices are falling in London. Do you even read the articles?

@10

Finally, a prediction about the consequences of a piece of economic news that everyone can get on board with.

Friday, January 16, 2015 08:40AM Report Comment
 

14. hpwatcher said...

@9

Prices are falling in London. Do you even read the articles?


Ever heard of confirmation bias?

Friday, January 16, 2015 09:34AM Report Comment
 

15. sneaker said...

I would suggest that markets trade against positions (especially in moments of crisis) and whilst sentiment is a matter of opinion, margin-calls are not. As we have seen in the last 24 hours, margin-calls win every time.

Friday, January 16, 2015 10:14AM Report Comment
 

16. Jammin35 said...

http://www.telegraph.co.uk/finance/economics/11347894/Swiss-franc-shock-triggers-mortgage-panic-for-wealthy-homeowners.html

Broker judgement: a lot of people in trouble, but the Swiss are too insignificant a group to reverse the drops in London property prices.
Except maybe in Enfield.

Friday, January 16, 2015 10:48AM Report Comment
 

17. libertas said...

Reticent, for Europeans, London house prices are still soaring relative to their Euro holdings. They will buy into that because the opportunity cost is holding devaluing Euros and Euro assets.

To understand finance you must understand relativity and be capable of complex thought.

Friday, January 16, 2015 12:22PM Report Comment
 

18. reticent said...

To understand finance, it helps to know things like:

i) what can be leveraged (capital) as opposed to what can be borrowed against (collateral, future income streams etc.)
ii) that 1.3% + base rate of 0.5% = 1.8% not 1.7%
iii) that 1.7% interest on £235k works out as £3995 p.a. or £332/month, not £217/month
iv) that if x is roughly pegged at 3.5*y and y is rising at 2.2%/year, that x is also rising at 2.2% p.a., not 7.7% p.a.

And since, in the last few weeks, you have proven not to know any of those things, perhaps you should stick to thinking more simply for now.

Friday, January 16, 2015 03:06PM Report Comment
 

19. reticent said...

Also, if you google "relativity and finance", the first sentence of the first (and really the only relevant) link on the first page is an essay that begins with the rather telling sentence:

"Little or nothing is written about relativity theory in relation to mathematical finance."

Friday, January 16, 2015 03:31PM Report Comment
 

20. Britishblue said...

Roughly speaking if you were a European that bought into London when it the Euro was sterling parity and your property has gone up 50%, you would need almost double the amount of Euros to buy the same property today. I suspect the reverse of Libertas. I think many Europeans will be thinking of cashing in their 'winnings' in London the appropriate time and buying cheap back home.

Friday, January 16, 2015 06:28PM Report Comment
 

21. reticent said...

@16 Classic.

That article largely ignores the people holding money in Swiss bank accounts, a good deal of which will be denominated in CHF.

Those global elite billionaires don't keep all their money in property.

At the end, it mentions 3 buckets of people but only enumerates 2. I suspect that would have been the third bucket, if the editor had caught the error.

Wednesday, January 21, 2015 10:22AM Report Comment
 

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