Few bank managers back in 2006 were aware of the consequences of their customers signing the terms and conditions of the Swiss Francs mortgage; and even fewer bank employees were in a position to explain the dangers that this product had for their clients.
The main argument in the marketing of Swiss Francs mortgages was that the interest rate (LIBOR) was lower than the one of EURIBOR at that time. Nevertheless, it was never expected that the Swiss Francs currency would fluctuate so dramatically against the Euro.
The result was obvious and fast. Many borrowers found themselves in the position of owing more money than they had originally borrowed. Moreover, they now had a higher interest rate than the one they had originally agreed to, since after the outbreak of the financial crisis, Euribor went down to almost 0,25%.
The Swiss francs mortgages have been challenged before the European courts. The outcome up until now has been in favour of the unsuspecting borrowers who, without knowing it, have “gabled” their property in the “forex” market exchange. Greek courts in particular have ruled that the Banks cannot follow the “fast track procedure” of the payment order against British expats, since this procedure requires permanent residence in Greece.
It seems that the tendency of the Courts is take a brave initiative to resolve this problematic situation, and based their arguments on the grounds of the negotiating inequality between the banks and the customers.
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