A number of home buyers in Cyprus have won their legal battle to be released from their crippling Swiss franc loans.
In what could prove be a landmark decision, a judge at the Paphos district court ruled in favour of borrowers whose Swiss franc loans were granted by the National Bank of Greece (Cyprus) Ltd; the borrowers were represented by the Zambartas law firm.
The judge hearing the case ordered the bank to convert their Swiss franc loans into Euros at the exchange rate that applied at the time the loan was granted.
The judge also ruled that bank was not entitled to charge interest on the late payments and rejected the bank’s claim to impose interest at 14% on the loan closure amount.
The judgement follows similar court rulings in favour of Swiss currency borrowers in Poland, Hungary and Croatia.
Swiss franc loans in Cyprus
Many homebuyers in Cyprus were persuaded by the local banks to take out home loans and mortgages denominated in Swiss francs in the years following the island’s accession to the European Union. They were attracted by the promise of low interest rates; the Swiss franc is a ‘stable currency’.
In cases brought to my attention, banks apparently failed to advise borrowers of the risks of fluctuations in exchange rates and interest rates inherent in foreign currency loans.
The value of the Swiss currency has more than doubled since 2008 sending loan repayments skyrocketing. British borrowers have been hit particularly hard as the value of Sterling has been on a downward trajectory since the Brexit referendum was announced in 2015.
The situation was further exacerbated when the Swiss franc abandoned its currency ceiling against the Euro in 2015.
The stress resulting from their crippling loan repayments has caused numerous marriage break-ups and tragically a number of suicides.