There have been signs of recovery, the European Central Bank (ECB) base rate is now at 1.0 percent – its lowest ever level. The ECB has also signalled that it will start buying covered bonds up to the tune of €60 billion, in the form of quantitative easing.
The ECB cut, coupled with the Bank of England’s decision to hold interest rates at 0.5 percent has already had a positive impact on the euro-sterling exchange rate. The pound has seen a slight rise from the record lows of the last few months, which had dramatically reduced British spending power abroad.
In fact, Moneycorp has seen a renewed interest from cash-rich investors looking to snap up holiday homes in popular locations across France, Spain, Italy and Portugal. People who had been tentatively searching for properties abroad are now starting to buy again.
Momentum in the property market is building and even if sterling remains at its current levels, this trend is likely to continue due to a sharp fall in the price of property abroad. The worst hit area has been Spain, where prices in some southern coastal resorts have fallen by up to 40 percent from their peak value. Popular areas of Italy, Portugal and northern Majorca have also suffered price falls of 10 to 20 percent, and there is no sign of this trend reversing in the short term. All in all, people who want to buy abroad will now be able to get far more for their money compared to 12 months ago.
For those looking to move overseas or for those who have already arrived and need to transfer money from the UK, the following tips can help you squeeze the most out of your sterling.
Shop around
Look for the best deal. Don’t assume that your high street bank will offer you good rates. A currency specialist will help you make the most of your funds by offering better rates of exchange and their lower transfer fees should help you save money. Many Brits already living abroad are suffering because of market fluctuations, but they could also be losing out on up to £200 million a year by using high street banks to transfer their payments – due to poor exchange rates and high transfer fees.
Plan ahead
Currency markets are in constant fluctuation and if you leave a payment to the last minute, you will have to accept the rate at the time of transfer – whatever that might be. If six months ago you knew you had to make a payment in euros around this time, but had done nothing to secure your exchange rate, the payment would now cost you a staggering 20 percent more. To avoid situations like this, you can use a ‘forward contract’, which allows you to lock into exchange rates for up to two years ahead. Forward contracts can be used to lock into favourable exchange rates, or to simply protect you against adverse currency movements – something which is important in today’s volatile currency markets. Some people prefer not to commit their entire requirement to a forward contract, as they would then not benefit from better exchange rates if they did become available in the future. However, with future prices notoriously difficult to predict, the opportunity to guarantee your rate can be hugely beneficial.
Don’t get stung by overseas bank charges
Be aware that overseas banks can often charge handling fees just for receiving your money. This can amount to 1 percent of the value of your transfer and soon adds up if you are making payments on a regular basis. However, a currency specialist will often absorb or eliminate these charges. In some cases you can also negotiate with the receiving bank before sending your funds.
Consolidate your payments
If you are sending money abroad on a regular basis, think about reducing the number of payments that you make and increasing the size of them. To avoid extra costs, expats can sign up to a Regular Payment Plan and take advantage of better rates, as well as the automation of their transfers via Direct Debit. The Regular Payment Plan from Moneycorp ensures that funds are fully automated, removing the hassle of making regular overseas transfers. From just £4 per transfer, or £8 for a premium ‘fast-track’ transfer (for same or next-day delivery), retirees can save significant sums of money – compared to making one-off payments with their high street bank. There are also different plan options available, allowing you to fix the sterling amount sent, the foreign currency amount received – or both. Plus, opening a Trading Facility with Moneycorp is completely free of charge.
Few countries have escaped the global downturn and the top expat destinations of Europe and further afield are no exception. The last few months have seen a surplus in the supply of overseas property, which has led to a decline in prices. Combined with the strengthening pound, this is a favourable environment for potential investors. By planning ahead and using an industry expert, buyers can make the most of the current situation.
