Baz Posted October 1, 2004 Share Posted October 1, 2004 The £ has weakened against the € and from its recent high of 1.52€ in the middle of July to this mornings level of 1.447€. I have always said do not gamble on the money markets and as a result maybe anyone buying a Property in France with sterling in the near future could be well advised to discuss with their financial adviser the merits of now forward purchasing their euros and remove the gamble. I have just had a conversation with a money market broker and the view in the markets is that the sterling will continue to weaken against the euro due in part to the current UK trading figures and no further rates rises expected in the near future from the Bank of England. Baz Link to comment Share on other sites More sharing options...
Teamedup Posted October 1, 2004 Share Posted October 1, 2004 I hate these fluctuations. OK, it is good for us at the moment, but then it can yo yo the other way and has quite often. A bit of stability at around 10ff to the pound would do me very nicely thankyou. That always seems a fair rate to me. I don't want 6.50 ff to the £ again or 14ff either. Link to comment Share on other sites More sharing options...
Lavenderlady Posted October 6, 2004 Share Posted October 6, 2004 We're about to set up our forward contract with HIFX for our mortgage. Question is (crystal balls at the ready please) should we fix the rate for 6 months, a year or 2 years? As the rate is so bad at the moment, should we assume (or hope) it might get better and just fix for 6 months? Then again, could it get even worse?Financial experts or clairvoyants please reply!!! Link to comment Share on other sites More sharing options...
Val_2 Posted October 6, 2004 Share Posted October 6, 2004 Looks like the £ has dropped again this morning. France is fast becoming a dream now to many with hopes of moving here what with increasing property prices, the highest fuel costs I've ever seen and the ordinary cost of day to day living and all that entails getting dearer and dearer. Just look at your mutuelle cotisations and see how they have gone up in the past couple of years. Link to comment Share on other sites More sharing options...
Baz Posted October 6, 2004 Author Share Posted October 6, 2004 Lavenderlady,I think you really should be asking this question to HIFX as they can certainly give you an indication of currency trends. The currency rate is probably in for a further correction as even today it has fluctuated by upto 0.75cents. However I have been told that the markets are saying it could be back 1.49€ by year end. With regards to forward purchase again you should discuss this with HIFX as you may be required to make possibly 10% sterling deposit and if you do not take up the bid by the chosen completion date the money will be lost. As you are talking as far ahead 1 to 2 years then surely you are better off just to wait and see.It is a gamble and many people get their fingers burnt by playing the money markets. Baz Link to comment Share on other sites More sharing options...
Clarkkent Posted October 7, 2004 Share Posted October 7, 2004 Lavender LadyI have long believed that if you are borrowing money to buy a house in France you should borrow the money in the country of your income. You can then be certain of the future impact of servicing the loan on your income. At least one uncontrollable variable is thus removed from your financial planning.The saving you make on a lower interest rate may be more than wiped out by interest rate fluctuations and by the costs associated with currency exchange. Link to comment Share on other sites More sharing options...
Iceni Posted October 7, 2004 Share Posted October 7, 2004 [quote]Lavender Lady I have long believed that if you are borrowing money to buy a house in France you should borrow the money in the country of your income. You can then be certain of the future impact of ...[/quote]LL- this is one of the best pieces of advice you will ever be offered. Suggest also that you take the longest fixed rate available - the certainty of confirming yr outgoings far outweighs any "loss" from a downward turn in GBP rates. Minor movements in GBP vs EUR int rates are nothing when compared to x rate chnages - and NO-ONE knows what is going to happen there.But that's only an opinion.John Link to comment Share on other sites More sharing options...
Weedon Posted October 9, 2004 Share Posted October 9, 2004 [quote]Lavender Lady I have long believed that if you are borrowing money to buy a house in France you should borrow the money in the country of your income. You can then be certain of the future impact of ...[/quote]In my humble opinion a far better piece of advice is not to borrow any money on buying a second home anywhere. The amount of borrowed money is the main reason why so many people in the UK are suffering so much stress in trying to service all of their loans. I know its such a boring stance to take but try to cut down on your outgoings until you can afford it, its better for you and your family.Weedon(53) Link to comment Share on other sites More sharing options...
CountrylassAnne Posted October 12, 2004 Share Posted October 12, 2004 Weedon I quite agree - we also must be very boring.....yawn, yawn!!!!We have an aversion to loans - call us old-fashioned and dull if you like, but I've seen lots of friends suffer with money problems and it's something I want to avoid. I was brought up not to 'live beyond my means', and am encouraging my teenagers to do the same. No, I am not the vicar's wife, just a country girl!! Link to comment Share on other sites More sharing options...
Fontremy Posted October 12, 2004 Share Posted October 12, 2004 There have been several similar discussions to this in the past. The last I remember was when rates had gone down to about 1.43 (about 9 months ago?) and there were several doom mongers predicting a dive to 1.20 or less. That's not going to happen any time soon as the fundamentals are that we have a much stronger and more flexible economy than Europe. OK, interest rates here may have peaked but they also aren't going to increase in the Euro zone in the forseeable future.My guess would be that the pound will continue to trade in the 1.43 to 1.53 range but not even the experts will commit to a firm opinion.As far as the currency for your mortgage there are other factors also to take into account such as are you going to rent your property and pay tax on the revenue? It is highly unlikely that you will be able to offset a UK mortgage against French tax, which is where you have to pay first (you can then offset against UK tax liability). Interest rates are also substantially cheaper in France and it would take a big shift in the exchange rate to offset the difference.FR Link to comment Share on other sites More sharing options...
Nickndrachael Posted October 31, 2004 Share Posted October 31, 2004 This is actually a very complex area that even large companies struggle with. It kind of depends on what your long term aims and ambitions are. The problem with having a sterling mortgage and a euro denominated property is if you ever need to sell the property you could end up with a large exchange loss (or gain). By having a euro mortgage you are matching the asset (the value of the house) with the liability (the mortgage).The ideal strategy depends upon how much of the property is secured against a loan and how sensitive the ability to make repayments are to exchange movements.What some people do is to have a 50:50 mortgage whereby half the loan is denominated in euros and half in sterling. That way you hedge your ability to continue making payments against the exchange gain or loss on the house. Link to comment Share on other sites More sharing options...
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