Sunday, 17 January 2016

Sunday, 17 January 2016

UK buyers for France / vendors returning to the UK

Very important – we always counsel our clients to make the most of advantageous use of currency rates as they change to suit, whether you are a buyer or seller.

The last 3 months has been especially volatile with rates as high as 1.42 and lows of just above 1.30. This is a decrease of 9.2% for UK buyers, but has seen vendors returning to the UK benefit by the reverse situation.

A fluctuation of this magnitude is not especially unusual, which is why we recommend regular contact with our currency experts.

Imagine that you had visited us in early November, and agreed a deal at say 300,000 €. Inevitably in your head, you do the calculation 300,000 ÷£214,285. That in your mind is the cost of the house that you have agreed to buy.

At the time we were advising clients, (backed up by evidence), that the £ had fallen back each time it had approached these peaks previously. So this was a good time to lock into a “forward” trade, and secure a rate of 1.40.

Some clients took heed of that advice. Some felt that the rate was only going one way and would “hold fire” seeking a better rate……..

If clients did not know for certain what to do, and let’s face it, who does, then we consider that a good strategy was to purchase 50% of the price on a forward and see what happened afterwards. Hedging your bets. Someone taking this course of action would be looking at the following scenario today: 150,000 ÷ 1.4 = £107,142 & 150,000 ÷ 1.3 = £115,385 - Total cost £225,527

This compares to biting the bullet today at 1.30 at a cost of £230,770.

The smart option would have cost £214,285, the each way bet £225,527 and going with the rate on the day £230,770. Now I always think that is money better off in your pockets…………

To keep up to date, you need to watch our currency partner’s daily update:
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