swiss franc mortgage

nearlyfreem

I am in the unenviable position of having a mortgage on a property in Cyprus which is in Swiss Francs. The mortgage itself is not really a problem,but the fact that the euro has pretty much collapsed against the CHF is causing huge problems- repayments and the actual mortgage amount owed in Euros have risen by approx 30% in the last 6 months!
I could get my hands on about two thirds of the mortgage amount, my question is should I just pay off that amount and suffer the loss now, or wait and pray that somebody manages to come up with some sort of a solution to the Euro crisis, and it regains some of the losses? Of course my real nightmare would be if the Euro collapses!
Any advice or opinions greatly appreciated.

OfflerCrocGod

You could hedge your position with FX options.

nearlyfreem

Thanks, but I dont know how to do this, I'm an FX virgin.

OfflerCrocGod

Umm, I think then it might be best if you don't mess with this stuff if you're not familiar with it.

Difficult to say what to do, if there is a proper solution worked out soon then the € may stop collapsing against CHF but I wouldn't bet on it.

ixus

I think the euro will collapse. We are still in the same position as 2008. ECB will print. Swiss franc goes with gold.

You will get pullbacks. I would try and pay down in trenches where possible on pullbacks in the currency.

How is the economy in Cyrpus? I heard yesterday that the PM was calling for a bailout after the munitions explosion. If it's in trouble I would be hesitant to pay down the debt if the economy look slike it could collapse and you lose the value of your property and get hit by currency movements.

Is your mortgage with a company in Cyprus? What is their recourse to you?

These are questions you need to ask yourself (not necessarily answer here).

OfflerCrocGod

ixus, I'd love to see a collapse in the € it is too high against the $, it would be hugely helpful if it were to drop down to 1.20-1.10 but it just seems unreal in it's strength.

I would not bet on a collapse, I'd simply love to see one.

ixus

Agreed on its strength, too many vested interests in a strong euro (ECB, Swiss, FED, China). A lot of central banks to fight there.

Still, the ESFS is nothing short of QE. It will weaken the euro eventually. Dangerous to trade but, the original poster could potential use bouts of euro strength against the Swiiss to pay down mortgage if one was so inclined.

OfflerCrocGod

People keep saying it's QE. It isn't.

It raises money from the markets and pays interest on that money, no money is created.

I wish it were QE.

ixus

Sorry, call it QE by another name if you want, but they are repo'ing junk bonds for more than the true/market value. The ECB said they would accept Portugese bonds of any rating. They are monetising bad debt. It may not be through primary dealers like Goldman but it's through the governments.

This should weaken the euro but, traders are aware that the ECB will defend the euro at all costs. It's a game until the death or a Soros like trade occurs.

I do understand this, even if I choose not to get overly technical on it.

(apologies for derailing the thread)

OfflerCrocGod

Don't worry ixus, get as technical as you want. Looking over the released accord I don't see any hint of money creation, the EFSF will raise the money on the market like any corporate or government. Could you explain to me where the money creation is?