Those holding British Pounds and currently in the process of a property purchase in France will have felt the pressure of the pound falling to a record low against the dollar overnight on Monday morning.
Pressure on the Pound
This rapid fall of the Pound was following investor’s reaction to the UK government’s sweeping tax cuts as part of their mini-budget last Friday.
The next few days will be crucial for the UK government, BoE and the pound, with further declines for the sterling highly likely, unless the BoE step in.
What affect is this having on your property purchase?
The average property purchase from offer to handover is around 3 months. In past 3 months we have seen a GBP/EUR at a high of 1.19564 and a low of 1.0836. With a budget of £350,000 this is the difference in being able to afford a €418,000 house and a €379,000 house in France.
Over the course of a few hours on the 26th September the GBP/EUR experienced it largest fall since the beginning of Covid times from 1.12651 to 1.0836. During this period, the value of your £350,000 will have dropped from €394,278 to €379,260, potentially causing you to not be able to afford your property. In a market that is as volatile as it is currently, it is more important than ever that you are getting the expert guidance that you need. For somebody who had utilised the tools of a currency
For those of you with an upcoming payment to make will be feeling rather jittery about making the call to transfer your funds at the current rate, however, there is also the possibility for this to fall even lower. Fortunately, there are tools available to you (see below) that can help you to protect your budget from any further fluctuations whilst simultaneously targeting an improved rate. For those a little more risk averse and want certainty over your funds, you also have the option of locking a rate in advance. Please see ‘What can you do?’ for a more in-depth overview.
What can you do?
Using a currency specialist opens the door to a multitude of options for you. You have access to a competitive rate of exchange and the expertise of a currency specialist whose role is to help you plan your transfer to make the most of your money. They will understand your situation and support you by tracking the rate and guiding you on when is the best time to trade, making your money go further.
Here are an example of a few of the tools available to you and how they can benefit your exchange:
- Spot contract– A spot contract is an agreement between you your FX provider to exchange money and buy foreign currency at the present exchange rate. This is the most common and traditional form of currency exchange and is suited to addressing any imminent currency transfer needs you may be.
- Market order– you could target a rate of exchange and if that rate is then hit, we could either buy the funds for you automatically, or notify you for your permission to buy. With the same principle we can set up a limit order to protect your transaction in case the rate falls below a certain level. This suits those who have some time on their hands and are optimistic that the rate might improve within their time frame. One of the advantages of the market order is to ensure that the currency is bought at the desired level even if the market only touches that level very briefly – and this includes when the markets are closed for trading.
- Forward contract– This allows you to fix a rate of exchange up to two years in the future in advance of a payment. This tool is very popular among property buyers as it allows them to fix the whole price of the property ahead of completion giving them the peace of mind and the certainty of how much they are going to pay for the property. But it is also a great way to take advantage of a positive rate movement. (Please note forward contracts may require a deposit)
Bear in mind that the rate can move in any direction and you can utilise these tools available to you to protect your budget. The sooner you get in contact with a specialist, the more time you have to plan your transaction, save money on the rate and remove the risk of currency fluctuations.
With a Platinum Trusted Service Award 2020 from independent review site Feefo and 40 years of experience in the industry, FrenchEntree has been recommending moneycorp for more than 15 years. During this time they have helped thousands of client planning the best way to pay for their property as well as supporting them afterwards with any further payment from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.
Furthermore, we have worked with the same person at moneycorp for more than a decade! You might be familiar with her as she often writes for our FrenchEntree magazine. She has 13 years’ experience in foreign exchange, and is a qualified European lawyer with experience in European transactions. Mar will be happy to answer any questions or enquiries to support you through these difficult times
Opening an account is really easy and free of cost. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees in any payment.
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