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July 12 (Bloomberg) -- The forint and the zloty weakened to a record low against the Swiss franc amid Europe's debt crisis, increasing mortgage payments for Polish and Hungarian homeowners.

The forint depreciated as much as 2.7 percent to 233.6 per franc and traded down 1.1 percent at 230.089 as of 4:32 p.m. in Budapest. The zloty dropped to as weak as 3.5152 versus the franc and traded at 3.4593, or 1.8 percent lower on the day. OTP Bank Nyrt., Hungary's largest lender, slid 1.4 percent to the lowest in more than three months.

The franc surged after yesterday's meeting between euro- area finance ministers failed to reassure markets that a solution to the region's debt crisis is imminent. The currency pared gains after Italy and Greece sold debt.

A weaker forint is bad for homeowners who bought their property with foreign-currency loans as repayments rise. Sixty- three percent of Hungarian household mortgages were denominated in foreign currencies as of April 30, with over 100,000 mortgages overdue, according to central-bank data.

In Poland, the total value of franc-denominated home loans reached 149.7 billion zloty ($52 billion) at the end of May and represented 53 percent of all mortgages outstanding, according to the financial market regulator's website.

"The substantial loan portfolio is the risk for banks" in Hungary, Akos Kuti, head of research at Equilor Befektetesi Zrt. brokerage, said by phone from Budapest. "It's that stability risk which may put pressure on OTP's stock."

Temporarily Fix

Prime Minister Viktor Orban's cabinet is delivering on a campaign pledge to protect foreign-currency borrowers who are unable to make payments as a result of the forint's weakening, particularly against the franc. The government and commercial banks in May agreed on a plan to temporarily fix the franc's exchange rate on household mortgages at 180 forint for a maximum of three-and-a-half years, according to Janos Muller, the chief adviser of the country's Banking Association.

Poland's Economy Minister Waldemar Pawlak proposed to limit exchange-rate spreads that commercial banks charge customers for servicing their mortgages in foreign currencies. The plan would foster more transparency, central bank Governor Marek Belka said on June 28.

Hungary was forced to ask for an international financial bailout in 2008 when the credit crisis prompted investors to sell off emerging-market assets. The country has the biggest debt burden among the European Union's eastern members.

"The question is how long the exchange rate will remain at these levels," Equilor's Kuti said. "If it's above 230 for one or two weeks or a month, that means at most one or two mortgage installments with an extra burden for households. That is not a big risk. The question is how long it will last."

--Editors: Linda Shen, Stephen Kirkland