Fluctuating exchange rates

It was the 18th February 2020 and Andrew and Theresa were celebrating that after nearly 3 years searching they had finally found their dream property in France. They put an offer straight away on a rural chateau close to Poitiers for €250,000. Back at home in the UK they commenced on their homework. The GBP/EUR rate at the time was above 1.20 and therefore the property was going to cost them £208,000 – well within their £225,000 budget.

Completion was initially scheduled for two months later, however, due to the delays caused by COVID-19, the signature of the Title Deeds eventually took place on the 30th June 2020. As Andrew and Theresa arranged for the final payment at this time, to their surprise the rate by then had fallen to 1.09 which meant that the price for the same property was now over £229,000 – more than £21,000 above the initial offer and £4,000 above their total budget. Theresa managed to raise some extra equity from a relative which saved their transaction and allowed them to complete their purchase.

Unfortunately cases as the one of Andrew and Theresa are not unique. The current volatility is affecting the wealth and the plans for those exposed to international payments.

What can you do to minimise the impact of negative volatility on your property budget?

Getting familiar with the rates at the early stages of your search will help you understand how they fluctuate. Registering with a foreign exchange specialist does not involve any cost or obligation, plus you will receive free guidance on the markets and have access to different tools to control that volatility. From receiving market updates to fixing a rate in advance or try to target a specific rate that suits your budget.

For instance in the case of Andrew and Theresa they could have fixed the rate of exchange on the whole property price as soon as the purchase was agreed by using a forward contract. Not only that would have given them a peace of mind of knowing how much exactly was the price but also would have avoided the impact of the negative fluctuations in the period leading to completion.

You can also ask moneycorp to watch the market for you and notify you of any relevant fluctuations to your transaction or sign up to receive daily updates and rate alerts to make sure you don’t miss any opportunity. All of this is in addition to being able to trade online 24/7 either via the moneycorp app or using the online platform.

At moneycorp we believe the circumstances of each client are unique and with this in mind each account is assigned to a personal dealer who will guide you through all the transaction. All our dealers have extensive experience with overseas transactions so no matter what stage you are at, we are always happy to have that initial conversation.

What to do next?

Opening a currency payments account is really easy and free of cost or obligation. You can register online or over the phone in a couple of minutes and for FrenchEntree there are no transfer fees for any payments.

Why moneycorp?

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 clients plan the best way to pay for their property as well as support them afterwards with any further payments from paying bills, mortgages to repatriating UK pension payments for those who have retired to France.

Open a free account today by clicking here.

Contact moneycorp at 020 3773 6355 or send your enquires here.

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