Sterling high good news for Brits buying property in Tenerife and eurozone.

January 27, 2012 – 10:55 am

Sterling high against the Euro a boost for property buyers in Tenerife and Spain

There was good news for Brits seeking to buy property in the eurozone as sterling reached a 15-month high against the euro currency. The euro’s value depreciated against the UK pound on the back of fresh concerns regarding the the health of the eurozone’s banking system.

Sterling increased by 0.73% to €1.208 on Wednesday  its highest level since September 2010. The euro also fell 0.95% against the dollar to $1.293. Despite concerns about the fragile state of the UK economy, it is generally considered to be doing better than the Eurozone, which is struggling with a major debt crisis.

Geoffrey Yu, currency strategist at UBS, told Reuters: “Maybe the UK is approaching a consensus (for a recession) but it’s not there yet. And there’s no break-up risk, so people are more willing to allocate funding from a passive perspective at the start of the year.”

However, despite the recent recovery in the strength of the pound versus the euro, some currency experts do not expect sterling’s value to increase much further in the short- to medium-term.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , , | Comments (0)

Euro value falls after Greek government lose support for a further financial rescue package

June 17, 2011 – 1:20 pm

Euro falls against currencies making Spain and Tenerife cheaper for most people to visit at present.

The euro dropped the most in almost six weeks against the dollar after the Greek prime minister’s government lost political support as the European Union struggled to break a deadlock on a second financial rescue for the nation.

Europe’s shared currency fell versus most of its major counterparts, except for Sweden’s krona, Norway’s krone and Denmark’s krone, which dropped as commodity prices slumped. Demand for assets linked to economic growth also eased after reports showed slowing manufacturing in the U.S. Sterling fell versus the dollar after a report showed Britain’s jobless claims rose in May more than economists forecast.

“There is a lot of noise going on in Europe and in Greece,” said Sara Yates, a foreign-exchange strategist at Barclays Plc in London. “What we’ve seen from the opposition party, that they don’t seem to be on the same page wanting to push through fiscal austerity and more privatization, that is worrying.”

The euro fell 1.8 percent to $1.4181 at 5 p.m. in New York, from $1.4440 yesterday, after touching $1.4156, the lowest level since May 27. It weakened as much as 2 percent against the dollar, the biggest intraday drop since May 5, when it fell as much as 2.1 percent.

Source: BusinessWeek.com

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European Central Bank rate decision

May 11, 2011 – 1:55 pm

Euro stays virtually unchanged for travellers to Tenerife,Spain and Europe

A shortened trading week in the United Kingdom as well as the main focus for analysts being on the Bank of England and European Central Bank rate decisions gave rise to range trading dominating the market for the early part of last week.

The Pound fell across the board on Tuesday before settling into the weeks ranges after the release of weaker UK PMI manufacturing data. The main concern for markets is the stability of economic growth in Britain and how this impacts the Bank of England’s ability to manage inflationary pressures. The PMI manufacturing index fell to 54.6 from 56.7 which was a downwardly revised figure and triggered a selloff in Sterling due to the negative impact the figures had on interest rate hike expectations. Market are now speculating that the BoE may move back to a more dovish position and thus hold interest rate until early next year, although these expectations are frequently revised the impact on the Pound is obvious, the market sold Sterling. Market expectations were reaffirmed by later releases of construction and services PMI that weakened as well. The monetary policy decision from the Bank of England offered no surprises with interest rates of 0.50% and the £200bln asset purchase program both remaining unchanged.

The Euro saw little movement ahead of the ECB’s rate decision on Thursday as traders we focused on future interest rate expectations and divided on whether the next move higher by the ECB would come in June or July, this kept markets somewhat reluctant to take any positions ahead of the policy announcement. The European Central Bank kept interests on hold at 1.25% as expected but a shift in tone from ECB President Trichet during the post decision press conference where he took a less hawkish stance weighed heavily on the single currency. Trichet did not use any of the traditional ‘code words’ market have come to expect to signal further rate hikes rather opting for stating the Governing council would ‘monitor very closely’ developments in inflation. The result is an expectation amongst analysts that no rate hike will occur in June and that July is now more likely.

The Dollar had a number of influencing factors last week in the form of a broad-based commodity selloff and weakness in the Pound and the Euro due to changes in interest rate expectations. Silver has in recent months been pushed higher for the same reasons as gold; geo-political tensions, global economic uncertainty and the unprecedented cash injections by the Fed but the commodities movements have been far more exaggerated making it more attractive to speculators who took Silver sharply lower this week and triggered a knock-on effect slide in gold and oil, thus aiding Dollar gains. The ECB’s pause on interest rate hikes created Euro weakness that aided the Dollar further but US fundamentals in the jobs market came out to the downside putting the brakes on the Greenback trend higher until the release of stronger Non-farm payrolls figures. The data came out at 244K from the previous 216K that gave rise to initial Dollar strength but expectations remained that ultra-loose monetary policy from the Fed would continue which capped any gains made. 

Source: Baydonhill FX

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Sterling slide against the euro and dollar is halted

February 17, 2011 – 12:18 pm

The sterling exchange rate against the euro affects those making property purchases inTenerife at present.

Sterling struggled for most of the week ahead of the Bank of England’s interest rate decision on Thursday. Recent speculation regarding potential interest rate hikes by the UK central bank saw traders buying into the pound but with low growth levels and inflation expectations indicating an increase in price pressures over the coming months the likelihood of a rate hike has diminished and concerns that premature monetary tightening could risk destabilising the UK recovery.

Economic data from the United Kingdom gave little support to the Pound which was batted around by risk aversion and movements in EUR/USD exchanges. The British Retail Consortium released its retail sales index which indicated sales had bounced back in January after a decline due to poor weather in December.

However, it is thought a rush to beat the VAT increase had contributed to the late push in higher retail spending. RICS house price data showed the pace of price declines eased for a third consecutive month. The data underlined the difficulty faced by the Bank of England in its decision over whether to raise interest rates, similarly a mixed performance in industrial and manufacturing output added to the argument that caution was required to support growth as well as tackling inflation.

The Bank of England rate decision saw the Pound react positively to the announcement and halted the currency’s slide versus the dollar and the euro. The UK central bank kept interest rate on hold at 0.50% and made no changes to its £200bln asset purchase program, as expected.

Expectations are still that the BoE may be forced to raise rates to combat inflation. A view supported by the release of higher than expected PPI inflation figures although late week geo-political tensions rising in Egypt prevented any gains as risk aversion dominated trade.

Clearly the sliding pound against the euro makes a difference for those who are trying  to buy property in Tenerife at present but also for  those who are selling and wish to change the euros back into pounds. The use of a good money exchange company such as Moneycorp will ensure that you get the best exchange rate for whichever currency that you have. The rates from these companies tend to be better than the high street banks. It really does pay to shop around.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

Pensioners abandon retirement dream due to sterling weakness

December 14, 2010 – 2:46 pm

The value of Sterling against the Euro is concerning for pensioners

Many UK pensioners are being forced to abandon their dream of retiring abroad because of the weakness of sterling, research has indicated.

Specialist currency brokers said it had seen a 28 per cent jump in the number of retired expats who were selling up and returning to the UK during the past 12 months. The situation  is a result of  a combination of the weakness of sterling, in which most retired expats still receive their pension, and rising inflation.

A spokesman said during the past five years the value of sterling had fluctuated by up to 67 per cent against the currencies in popular retirement destinations, having a dramatic impact on the amount of money people had to live off each month.

For people who have retired in eurozone countries, such as France, Spain and the Canary Islands, exchange rates on a typical monthly transfer of £1,175 have varied by 49 per cent during the past five years, varying from a high of 1,793 euros to a low of just 589 euros.

Pensioners Paul and Cherie Ripley have been trying to sell up and return to the UK from Alicante for the last 18 months, having watched the value of their house fall by 50 per cent in the last six years.

Mr Ripley said: “A combination of the exchange rate and the economic crisis has meant that we have lost a hell of a lot of money. The catch is we can’t really afford to stay and we can’t afford to buy back home. The worry on top is that Spanish death duties are extremely fierce and we, like a lot of people out here, didn’t really investigate these extra costs when moving out here, retirement in the sun was a big draw at the time.”

Pensioners in the US have seen a 53 per cent swing in the number of dollars they get for the same amount, while those in Australia have been the hardest hit, seeing the number of Australian dollars £1,175 buys vary by 67 per cent, ranging from 3,112 Australian dollars to just 1,247 Australian dollars.

To make matters worse, around half of people who retire abroad do not have a state pension that increases each year in line with inflation.

Pensioners who retire to countries such as Australia, New Zealand and South Africa, which do not have a reciprocal social security arrangement with the UK, have the value of their state pension frozen at the date on which they left the UK.  But even those who do have an index-linked state pension may still see it eroded in value over time going forward.

The Government recently announced that the state pension would rise each year in line with inflation, average earnings or 2.5 per cent, whichever is greater. But it is changing the measure of inflation that is used from the Retail Prices Index to the Consumer Prices Index, which tends to be lower.

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British Expats favour British banks

November 25, 2010 – 2:12 pm

British expats favour British banks

British expats believe that British banks are best and many prefer to keep their savings in Sterling, a survey has found.

Their confidence in the British financial system is maintained even after living abroad for many years with 55% of those who have been overseas for over five years still having a UK current account and 80% still holding money in Sterling, the survey from Lloyds TSB International shows.

The survey of British expats, living in France, Hong Kong, Spain, South Africa, the United Arab Emirates and the US, also shows that confidence in sterling is high in comparison with other currencies, with four times (44% versus 11%) as many respondents believing that sterling is stronger than the euro for their savings. Only 3% of those now living abroad cite weakness in sterling as a factor most likely to contribute to having to return home early.

‘It is reassuring to see that so many British expats are confident in the future of sterling which, after depreciating over the past few years, has stabilised as the economic recovery has taken hold and measures to improve the public finances have been laid out. In part their behaviour has been a reflection on what has occurred in the wider financial markets with the flight from more indebted economies,’ said Jakob Pfaudler, managing director of Lloyds TSB International.

Gordon Maddock, who has lived in Almeria, Spain since 1995, agrees with the findings of the survey. He decided to move abroad on his retirement and take the opportunity to establish himself as an author, artist and composer. He has since published three books and exhibited art in Germany, Spain, America and the UK.

He holds his savings in sterling and has confidence in its increase over the next six months, whilst believing that sterling remains a strong currency in the Western economy. Maddock also has a current account with BBVA in Spain and has found that bank charges are higher in Spain for all accounts and he would only consider moving his money when conditions demand, rather than for better investment.

For Maddock sterling is also convenient as he has a government pension and has to declare taxation matters in the UK.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , , , , | Comments (0)

Tourists returning to Tenerife

June 28, 2010 – 6:24 pm
Tourists return to Tenerife as the pound increases in value against the Euro

Tourists return to Tenerife as the pound increases in value against the Euro

British tourists are being wooed back to the Continent with more for their money. As sterling rose this week against the euro to its highest level since December 2008, giving British travellers up to 10 per cent more for their money than last summer.

“Holidaymakers can now expect to get more for their pounds travelling to one of the Eurozone countries than anywhere else,” said Sarah Munro, head of travel money at the Post Office.

Given the continuing concern over the future of the euro, the pound could strengthen further, while reports suggest that hotels and restaurants on the Continent are attempting to attract holidaymakers by reducing prices.

“Our research also shows that prices have plummeted in some of the most popular resorts – especially in Spain and Portugal, where restaurants have slashed their prices,” Ms Munro said.

The total average cost of several holiday essentials, including drinks, sun cream and a meal in a local restaurant, has fallen by 42 per cent in the Algarve, for example, and by 40 per cent in Spain, according to the Post Office. Similar research released this week by Thomas Cook also suggested that mainland Spain offers particularly good value for visitors from Britain.

“Exchange rates have a huge impact on where Britons choose to travel,” said Francis Tuke, a spokeswoman for Abta, the travel association. “The weakening of the euro will undoubtedly encourage us to return to the Eurozone.”

She added that hotel prices had fallen in Spain during the past year and that travel companies expected rates to fall in Greece.

Cheapflights.co.uk, the price-comparison website, has reported that searches for flights to Eurozone destinations increased by 6 per cent during May compared with the same month last year.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , , , | Comments (0)

Euro loans entice overseas investors to Tenerife.

June 20, 2010 – 5:22 pm
Euro loans helping with purchase of Tenerife and Spanish property

Euro loans helping with purchase of Tenerife and Spanish property

Overseas mortgage specialist, Conti, is convinced that UK overseas property investors who took out euro-denominated mortgages earlier this year are already seeing the benefits. Such a move would not only have allowed them to take advantage of cheap interest rates, but could potentially save significant sums of money if sterling appreciates against the euro over the next few years, as experts predict.

For example, an investor taking out a euro mortgage of €250,000 in February 2010 for a property in Spain, based on the exchange rate at that time of around €1.1 per £1, made a commitment of around £227,000 to pay off the loan.

The exchange rate has since improved to around €1.2 per £1, reducing the cost by £18,000 in just four months.

If the rise continues in favour of the pound to €1.3 over the next two years, the borrower would only have to find around £192,000 to repay the mortgage, reducing the cost by £35,000 in sterling terms, although mortgage costs and notaire fees need to be factored in.

Conti’s operations director, Clare Nessling, comments: “Even cash-rich buyers could consider taking out a euro mortgage until the exchange rate improves, at which point they can pay it back and ultimately reduce the price they pay for the property.”

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Weather | Tagged , , , , , , , , , | Comments (0)

Interest in buying property in Spain and Canary Isles is increasing

June 19, 2010 – 12:03 pm

Interest in buying property in Spain and the Canary Isles is increasing with more people searching for Spanish real estate in May, according to the latest index from Rightmove. Overall 58% of locations saw an increase in property searches, 42% saw a decrease and 0.2% experienced no change.

Half of the top time climbers in May were in Spain and its Islands There was also interest in South Africa but this is put down to curiosity generated by the World Cup football tournament rather than an increase in serious buyers. June is expected to see even more interest as football fever continues.

Interest in property in Tenerife and Spain increasing once more

Interest in property in Tenerife and Spain increasing once more

‘May was a great result for Spain, fed by returning confidence among buyers as the bad memories and headlines of last year fade. It’s always hard to let go of what your property was worth at the peak of  the market and accept times have changed, but vendors also seem more open and have much improved realism about prices necessary to make transactions happen,’ said Robin Wilson, Head of Overseas at Rightmove.

‘The improving Euro exchange rate is definitely playing a part, up 10% on January this year and 20% on January last year, meaning buyer’s budgets can go further,’ he added.

Moneycorp, one of the UK’s leading foreign exchange specialists, has also seen a rise in enquiries for Spanish properties, which amounted to an increase of 11.8% between March and May.

‘Throughout May, sterling gained good ground against a weak Euro. Having started the month at €1.14, the rate eventually reached €1.18 towards the end of the month. The pound has benefitted from economic data which continues to support the view that the UK recovery is gaining traction,’ said David Kerns, Head of Private Clients at Moneycorp.

‘In contrast, the Euro has continued to weaken, following news that Spain’s AAA credit rating had been downgraded. It was sent even lower when the European Central Bank warned that Euro zone banks faced writing off another €195 billion of bad loans. The increase in the Sterling/Euro exchange rate would have made properties within the Euro zone an increasingly more attractive prospect for Euro buyers, and explains the surge in interest.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , , , , | Comments (0)

Cost of maintaining property overseas increases

June 13, 2010 – 11:40 am

Maintaining property in Tenerife on the increase

Maintaining property in Tenerife on the increase

85% of overseas property owners say the cost of maintaining their property has gone up in the last 12 months, so check out this guide on how to reduce the cost of being an overseas property owner.



Over a million Brits currently own a home overseas, with France and Spain being the most popular destinations. However the global economic slowdown has hit homeowners not only at home, but also abroad as the cost of maintaining a property has increased -over a fifth of owners (21%) are struggling to meet the increased costs, according to latest research.

Whilst mortgage rates may have gone down for many owners, the overall cost of owning a property overseas (including local taxes, utility bills, maintenance costs etc) has continued to grow and the rising costs of ownership have been magnified by sterling’s depreciation.  Many homeowners are also seeing their rental income from a holiday home hit, as the number of potential tenants decreases with more people opting for ‘stay-cations’ in their home country.

To help the million plus Brits who currently own a home overseas, HiFX has complied a guide to reducing the cost of ownership, including cutting the costs of international money transfers, how to ensure the property is as tax efficient as possible and how to maximise rental opportunities.

1. Protect yourself from currency fluctuation:

Two years ago the average overseas home owner transferred £10,000 a year to meet maintenance costs (including overseas mortgage payments) and provide spending money when they visit their second home. However as the pound has taken a beating against all the world’s major currencies, they now have to convert significantly more in order to meet the costs associated with their international property such as maintenance costs, mortgage payments, utility bills and local taxes.

For example, in October 2008, £10,000 would have bought you €12,900.  To receive the same amount of Euros today, a Brit has to transfer £11,896, almost £2,000 more.

Advice for Brits who are feeling the pinch:

People making regular currency transfers should set up a Regular Payment Abroad plan with a currency broker that allows you to lock into an exchange rate for up to 12 months ahead so you know know exactly how much is being transferred every month. A Regular Payments Abroad plan also saves you forking out on commission and transfer fees. Banks typically charge up to £30 as a transfer fee on each and every transaction, up to 2% commission on the amount being transferred and, depending on the destination bank account, you may also be charged a further 0.5% receiving fee by the overseas bank.

Those who are uneasy about fixing the exchange rate and are more bullish about Sterling’s future or those who are making international transfers on an ad-hoc basis should at the very least shop around for better exchange rates and compare the rates offered by their high street bank with a currency specialist, particularly one which offers an online service for smaller amounts of money

2. Cash in on rental opportunities

According to the research, almost 70% of holiday home owners are missing out on vital income by not renting out their overseas property. Almost half of those that do rent it out only do so to friends and family who traditionally pay less than other tenants.   Talk to neighbours, the local economic development office and estate agents about rental rates, which websites work for advertising their holiday home and the seasonality for tourists.  If you decide to use a website to advertise your holiday home, put some effort into putting great pictures up and writing an attractive description.

3.  Ensure your property is tax efficient

Overseas home owners have to pay ongoing taxes on ownership, such as local taxes or even tax on rental income.  This is usually payable in the country where the property is located, but if you are a UK resident, such income also needs to be recalculated into Sterling and is taxable in the UK, regardless of where it is paid, with any appropriate relief given in the UK for taxes paid abroad. Each country will tax the income according to its own rules, so sometimes more allowances are available abroad than in the UK or the tax rates abroad may be lower, but the higher tax liability will be due.  However, there may be ways of reducing your tax bill, but whatever you do, you only pay tax when you make money. Spending money unnecessarily to save tax can often be a false economy; after all, why spend £100 to save £40? It is important to make sure that you claim whatever allowances you are entitled to. Make sure you know the rules or employ someone to prepare the returns for you.  Trying to do it yourself, if you don’t understand the rules, can be a false economy.

People who take advice before buying their property abroad often manage to make their purchase more cost-effective than those who buy without taking advice.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized, Weather | Tagged , , , , , , , , , , , , | Comments (0)