Polish zloty tumbles 20% against Swiss franc over mortgage fears

The soaring Swiss franc spread panic Thursday among Polish homeowners who have taken out mortgages in the currency, as their monthly payments will jump.

Switzerland's central bank ended Thursday its bid to artificially hold down the value of its currency and it soared almost 30 percent against the euro.

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.

"This is going to be painful," said Piotr Andrzejewski, a 45-year-old media executive in Warsaw who has a loan of 120,000 Swiss francs, adding that his monthly payment will go up by 70-95 euros if today's rate holds.

"It's worse for those who have to sell their apartment today while still paying off the mortgage. Its possible that in some cases the value of the loan will exceed the value of the property," he told AFP.

At 1 pm (1200 GMT) the Swiss franc traded at 4.20 zloty -- an increase of 18.5 percent compared to Wednesday. The main index on the Warsaw stock exchange fell by around two percent.

The craze for taking out loans in Swiss francs swept across Poland, as well Croatia and Hungary, in the early 2000s.

Around 40 percent of Polish mortgage loans are in Swiss francs, or the equivalent of around 31 billion euros ($36 billion), according to Poland's Financial Supervisory Authority (KNF).

Rumours circulated across Poland in October of the possibility of the Swiss franc's rise against the zloty, which led to politicians of all stripes to ask the government and banks to address the issue.