14.10.2022
A number of home buyers in Cyprus have won a legal battle to be freed from their overburdening Swiss franc loans.
A judge from the Paphos District Court delivered a fateful ruling in favor of borrowers whose Swiss franc loans were provided by the National Bank of Greece (Cyprus) Ltd. ; the interests of the borrowers were represented by the law firm Zambartas.
The judge hearing the case ordered the bank to convert their Swiss franc loans into euros at the exchange rate in effect at the time the loan was issued.
The judge also ruled that the bank had no right to accrue interest on late payments, and rejected the bank’s demand for interest at a rate of 14% of the closing amount of the loan.
The decision follows similar court rulings in favor of Swiss currency borrowers in Poland, Hungary and Croatia.
Loans in Swiss francs in Cyprus
Many homebuyers in Cyprus were persuaded by 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 exchange rate and interest rate risks inherent in foreign currency loans.
The value of the Swiss currency has more than doubled since 2008, leading to a sharp increase in loan repayments. British borrowers have been hit particularly hard as the value of the pound sterling has fallen since the Brexit referendum was announced in 2015.
The situation escalated further when the Swiss franc dropped its currency cap against the euro in 2015.
The stress caused by their crippling loan repayments has led to numerous marriage breakups and, unfortunately, a number of suicides.
