British buyers benefit as Euro interest rates fall
This month the ECB cut the central re-financing rate, a key factor influencing mortgage rates, from 0.25% to 0.15%. It also imposed a negative interest rate for banks keeping money on deposit for the first time.
As a result, the cost of euro-denominated mortgages from European banks is falling, just as strengthening Sterling increases the purchasing power of British buyers looking to acquire property on the continent.
Richard Way, editor of The Overseas guides Company, said:
“This is the sixth ECB rate cut in the last two-and-a-half years and means the monthly payment of a tracker mortgage on a €300,000 loan by is around €240 a month less compared to in the autumn 2011. Meanwhile, Sterling has hovered around an 18-month high against the euro, adding further impetus to the buying power of Britons in depressed property markets, such as Spain and France.”
Meanwhile, property portal Rightmove Overseas reported an increase in the number of people searching for properties in Spain and Portugal in May – and also a spike in interest in Brazil, which it attributes to the World Cup.
Shameem Golamy, head of Rightmove Overseas said:
“World Cup fever is well and truly upon us. Not only are buyers supporting their teams in the competition, but it looks as though they are also hoping to score their dream property. Searches for property in Brazil increased in May, particularly in Rio de Janerio. Media coverage showing off their beautiful landscapes, stunning beaches and fun parties is creating curiosity for future buyers as a potential place to purchase, whether that be for investment or as a second home.
“May also saw searches for property in Spain and Portugal grow. As we begin to enter the summer holiday season, buyers are considering their favourite holiday destinations as potential places to buy. It’s easy to see why Frigiliana, Malaga caught the eyes of buyers in May. With views of the mountains and the sea, this area oozes relaxation and tranquillity.”
Charles Purdy, managing director of Smart Currency Exchange said:
“As highlighted, world cup fever is upon us and interesting to note mention of three possible winners; Brazil, Spain and Portugal. Their respective currencies though, the Brazilian real and the euro, are far from being winners.
“But this is good news for overseas property buyers as it means you will get even more for your sterling and your dream property will cost you less. In fact we have just seen the euro hit a sixteen month low against sterling which makes that dream home even cheaper and after watching England play you may welcome, or need, the relaxation and tranquillity of Malaga.”