# Crystal Ball Required



## stevesainty (Jan 7, 2011)

Following our decision to start serious house hunting in the autumn, the current £ exchange rate to € is beginning to seriously reduce our choices in property. 

If anyone has a crystal ball, could they please let us know how the exchange rate will end up by the end of 2013?


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## Filsh (Apr 8, 2013)

stevesainty said:


> Following our decision to start serious house hunting in the autumn, the current £ exchange rate to € is beginning to seriously reduce our choices in property.
> 
> If anyone has a crystal ball, could they please let us know how the exchange rate will end up by the end of 2013?


Very hard to call! I have friends that trade in the FX market and it can be even be a bit of mystery to them in dealing with long term trades/FX rate predictions. However, since the new Bank of England came in he said he would like to see the pound devalued but we will have to see what happens with the quantitative easing plans. A lot balances on UK interest rates also, it has been rumoured that the 0.5% will be staying for some time to come but if that increases the market should respond and the pound should increase. Also, really depends on output of nations in the EU versus UK output, with both starting to see some small improvements it's hard to judge right now. 
In short....I have no idea!


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## baldilocks (Mar 7, 2010)

Filsh said:


> Very hard to call! I have friends that trade in the FX market and it can be even be a bit of mystery to them in dealing with long term trades/FX rate predictions. However, since the new Bank of England came in he said he would like to see the pound devalued but we will have to see what happens with the quantitative easing plans. A lot balances on UK interest rates also, it has been rumoured that the 0.5% will be staying for some time to come but if that increases the market should respond and the pound should increase. Also, really depends on output of nations in the EU versus UK output, with both starting to see some small improvements it's hard to judge right now.
> In short....I have no idea!


The pound has already been effectively devalued with QE. You can't print more paper with nothing to back it up without reducing its value. The Eurozone countries cannot devalue nor use QE because they don't own their own currency.


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## Filsh (Apr 8, 2013)

baldilocks said:


> The pound has already been effectively devalued with QE. You can't print more paper with nothing to back it up without reducing its value. The Eurozone countries cannot devalue nor use QE because they don't own their own currency.


Yes, that is true of the Eurozone countries but I was mentioning the UK QE which is currently at £375bn can be changed and if it were increased it would effectively deflate the value of the pound. However, the BoE just announced that there would be no change anytime soon so relatively good news for the exchange rates for the OP.


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## baldilocks (Mar 7, 2010)

In my experience, crystal balls are a quite unreliable way of predicting the future and have an annoying habit of making a "clinking" noise when you walk!


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## Sirtravelot (Jul 20, 2011)

If there is one thing I learned it's this: 

Don't ever believe anyone who tells you they know how currencies will be like tomorrow.

If someone tells you this just nod politely and erase it from your memory.


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## stevesainty (Jan 7, 2011)

Sirtravelot said:


> If there is one thing I learned it's this:
> 
> Don't ever believe anyone who tells you they know how currencies will be like tomorrow.
> 
> If someone tells you this just nod politely and erase it from your memory.


Yes, I accept what you are saying and I did not expect any hard and fast answers.

But

1) Getting finances together from various pots takes some time to organise. 
2) When to press the exchange button to convert from £ to € is a nightmare.
3) Once the dosh is converted into € where does one keep it until required, here, UK, offshore.
4) How can we know what our ceiling is for negotiating purposes?

Some guidance to help me rationalise the above was what I was really asking advice about.

We have already made the decision to buy rather than rent and that was a tortuous exercise in itself.


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## mrypg9 (Apr 26, 2008)

stevesainty said:


> Yes, I accept what you are saying and I did not expect any hard and fast answers.
> 
> But
> 
> ...


No-one can make judgment calls for you.

All I would say is that if buying is giving you such problems, why not rent for six months in the area where you intend to buy?

Only you can know when you've reached your 'ceiling', unless you want to post your bank account details for us all to peruse!


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## stevesainty (Jan 7, 2011)

mrypg9 said:


> No-one can make judgment calls for you.
> 
> All I would say is that if buying is giving you such problems, why not rent for six months in the area where you intend to buy?
> 
> Only you can know when you've reached your 'ceiling', unless you want to post your bank account details for us all to peruse!


Thanks mrypg9 for your advice, you seem know what you are talking about but we have been renting in the area since October last and so we know where we want to be.

As far as the ceiling goes, we have decided what it is in sterling but the euro equivalent keeps dropping at the moment, and this is the dilemma. If we put in an offer today and the rate drops by the time it is accepted we will have a shortfall. If we put in a lower offer to try and cater for any rate drop, we risk the vendor not accepting.

Having said all that, we are not going to start viewing properties until the autumn. I am just trying to get a few ducks lined up.


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## xabiaxica (Jun 23, 2009)

work on 1€ = 1GBP & transfer the money when you _need _it


no science/calculations involved & probably just as good as anything anyone else comes up with..............


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## baldilocks (Mar 7, 2010)

stevesainty said:


> Yes, I accept what you are saying and I did not expect any hard and fast answers.
> 
> But
> 
> ...


As someone who also took the buy rather than rent route, I will relate our process. 

Number one priority - forget about exchange rates, neither you nor anybody else can tell you what the rate will be tomorrow, the day after or when (unless you are able to have such a sum handy and can foretell precisely when you will need it and therefore forward buy or fix the rate), so stop wringing your hands about whether you are getting the best rate or whether you might be better off waiting until tomorrow or the day after or the day after that or.... 

Either have a deposit in ready cash or where it is easily accessible (usually one or two thousand Euros will suffice to hold a property until you can pay more). Any future moneys, unless you are required to do otherwise, you leave with a solicitor in a client account.

Once you have found your property and agreed a deal, paid your holding deposit, agree a date for when you will make either future payments or complete and pay the balance.

What we did was find a place, agree a price. The seller was in no hurry to move since they were going to have a new place built. We needed to sell our flat in UK the mortgage on which, we had extended to finance the purchase of a place for my in-laws in Florida (f-i-l died subsequently so m-i-l was going to have to live with us) which we needed to sell. Due to realtor incompetence in Florida, the sale took far longer than it should so book value fell from $380k to an eventual $190k (roughly what we had paid for it! - (November 2007) and by the time the mortgage was paid off we had enough to cover the fees and the shipping of personal effects to a future address in Spain plus the storage until we could have it shipped. 

We paid our €1000 holding deposit on this house June 2007. We scraped €10k together and paid that over in September 2007. We approached the BS for another extension on our flat and paid the balance of 50% of the price in January 2008. Although, as it happened there was no real risk of it happening, we didn't want to push our luck and have the whole deal fall through, September 2008 we again tapped the BS for the balance of the purchase price and expenses and we completed our purchase and decided that we would move at the beginning of November. No sooner had we done that than we found a buyer for the flat. Everything went through perfectly, sold my car to the buyer of the flat (he wanted the Reg No!). SWMBO's car was kept for the time being since she had work contracts to fulfil before she moved at the beginning of Feb 2009.

At no point did we worry about exchange rates - we might have done better if we waited a few days but there might just as well have been a sudden crash and we could have done one hell of a lot worse.


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## baldilocks (Mar 7, 2010)

We decided to open a Euro account with one of the UK big five banks - don't bother it isn't worth it. 

You have to do most of your transactions by phone which, when you are dealing with foreign names and addresses show up the British reluctance and inability to embrace language learning. The alternative is the Euro cheque book that they supply but the handling costs from a Spanish bank plus the fact that it can take up to two weeks or more to clear the cheque (which has to be sent back to UK) means that they are not very useful and cost money to use.

Based on our experience, either get your bank to transfer to your Spanish bank account or to your solicitor's client account, you will get the business rate of exchange or, for smaller amounts you can draw cash from a UK bank in Euros and bring it with you (at your own risk, of course). 

Others may advocate the use of a Foreign Exchange transfer company but that is up to you.


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