Interest Rates and Quantitative Easing
While the currency markets remain clouded in uncertainty the key economic data release in February is likely to be the latest Bank of England (BoE) interest rate decision and more specifically whether they will introduce the latest round of Quantitative Easing (QE). QE has been discussed over the last few weeks and several of the BoE members have publically aired their views on the hot topic. History shows us that when QE is announced it can have a rather negative effect on that economies currency however in the longer term can have a positive impact on the economy. So, with the UK halfway to recession the likelihood for QE has increased which could mean if released we could see Sterling fall from its close to 16 month high against the Euro.

France Cut Growth Outlook
French President Nicolas Sarkozy has announced that he expects the country’s economy to grow by just 0.5% half of what he had previously predicted. Sarkozy cited Frances’ exposure to Greek debt and a worsening outlook for Europe’s overall economy as reasons why the French economy is likely to show only minimal growth this year.

While Germany and France have spent much of the last couple of years propping up the smaller EU economies such as Greece, should we see France begin to struggle financially then it will put yet more pressure on Germany and the rest of Europe affecting Euro exchange rates.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 014 9472 5353

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	What next? Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your French property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or visit their website: www.currencies.co.uk

In the UK recent reports from Reuters and Deloitte have shown that there is over a 50% chance of the UK re-entering recession, however the report shows that this figure increases should a country leave the Eurozone. So, while it may seem that the economic problems in Europe are pushing the exchange rates up there is a chance that these problems in Europe will have a negative impact on the UK and therefore Sterling. The last time we saw recession hit the UK back in 2008 the Pound plummeted over 20 cents. While it would be a surprise to see this movement again this year it is not unthinkable that we could see at least some Sterling weakness. This could mean that the current highs may be short-lived.

With the New Year providing Euro buyers such a good opportunity now is a good time to speak with a currency expert who can talk you through all the options available to you so you can make the most of the current highs. Contract types such as limit orders means clients can select a specific exchange rate they would like to achieve and should the market reach that level they will automatically buy for the client. This means clients do not have to sit watching the rates of exchange on a daily basis and instead let the markets do the work for them. For more information on the market outlook or the contract types offered contact us today.
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	What next? Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your French property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or visit their website: www.currencies.co.uk

GBP-EUR Forecast
We are currently just off a 9 month high against the Euro meaning we are currently witnessing some excellent buying opportunities. However, with contagion from Greece spreading through Spain and Italy causing regime change the focus is well and truly on Germany, the ‘Cashpoint’ of the Eurozone, to bring some kind of stability to the region. The recent announcement of a fiscal union between France and Germany has brought some confidence back to Europe, this coupled with the new leadership in some of the more troubled economies has helped strengthen the Euro in recent weeks. Across the channel in the UK however, any sort of increase in confidence and therefore Sterling strength is likely to be a much longer process and is likely to lag behind any Euro recovery. The economic problems in the UK appear to be deep rooted with high inflation, high unemployment, spiraling debt levels and minimal growth, the net result of this could be that we see GBP remain under pressure in the coming months with moves towards the 1.1000 area the most likely outcome as we move through the 2012.

Christmas is coming!
As holiday season fast approaches it is important to stay in close contact with a specialist currency broker through what is likely to be a volatile period for the currency markets. Over Christmas the amounts of money moving through the currency markets is often significantly reduced as a result we can see much larger than usual swings in the exchange rates meaning December can produce good trading opportunities. If you need to send money internationally make sure you let the team at Foreign Currency Direct plc know so they can keep you informed of any relevant market movement. As a specialist currency broker Foreign Currency Direct plc can offer a number of tools including a forward contract where, for a small deposit, clients can fix the rate of exchange for a period in the future perfect to help you budget, make the most of a good exchange rate even if funds are not needed straight away and also help take some of the risk out of the markets.

	What next?   Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or visit their website: www.currencies.co.uk

•    Private banks holding Greek debt accepting a 50% loss
•    The Euopean Financial Stability Fund (EFSF) [a fund used to provide financial backing to struggling European countries] to be boosted to €1trillion
•    Banks told to recapitalize by €106bn

This package was debated over a number of days and despite being agreed is still not seen as the final answer to the European’s problem. What is known though is that with so much uncertainty in the market the movement we are seeing in the currency market is significant. In fact, last month we saw a difference between the high and the low of the month of €8,200 on a £200,000 currency transfer!

Will China come to the rescue?
Following on from the new rescue package the head of the European Financial Stability Facility (Klaus Regling) met Chinese ministers to discuss the possibilities of borrowing money to rescue them from the current debt crisis. China’s Vice-Finance Minister Zhu Guangyao said China is open to all options and is willing to discuss.’ When first created the EFSF was set up with €440bn and has recently been increased to €1 trillion as mentioned above but according to the IMF the EFSF might need twice that amount to avoid further problems. With China ready for talks but not fully committed we could see further Euro instability.

New Leader of the European Central Bank
November sees the end of Jean Claude-Trichet’s 8 year reign as president of the European Central Bank (ECB). In his place comes the Italian Mario Draghi who is taking control at a time when Italy is in the headlines with a spiralling debt level and in a recent poll released on Sunday the Dutch public remain overwhelmingly pessimistic about the prospects of the Euro and fear that Italy or Spain will be the next in need of a bailout.

It appears that Mr Drahi will have his work cut out for him!

Euro Outlook
The outlook for this month on Euro exchange rates remains unclear and it is likely that developments in Europe will have a big impact on exchange rates. So, if you need to transfer funds internationally make sure you speak to a specialist currency broker who will be able to keep you informed of all the market movement and ensure you get the best rates available in the markets.

	What next?   Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or visit their website: www.currencies.co.uk

In the UK the main focus is on whether the Bank of England (BoE) will try to help stimulate the economy by increasing the money supply through Quantitative Easing (QE). Should the BoE conduct more QE we could see more volatility in the currency market, in fact the last time the BoE introduced QE we saw Sterling weakness and as this announcement is due for Thursday 6th October it could set the tone for the rest of the month.

With so much happening in the currency markets never has it been more important to be dealing with an expert currency specialist. In fact just in September alone we witnessed movement close to 3% which is the equivalent to a saving of close to €7,000 on a £200,000 currency transfer if you traded at the high compared to the low point.

	What next?   Call +44 (0)1494 725353 (Open 8:30am – 6pm (UK Time) > Open a Currency account today > Request a call back > Ask questions about Currency Exchange

Foreign Currency Direct plc (FCD) are Sextant Properties preferred currency partner and have been selected due to their award winning exchange rates having topped the exchange rate tables in The Sunday Times for three consecutive years. FCD also offer a number of different contract options for Sextant clients including a forward contract where you can fix a rate of exchange for a period in the future using just a small deposit, perfect to help take the risk out of the currency markets and budget for your property purchase.

If you would like to discuss your currency requirements and all the options open to you including the forward contracts please contact our preferred currency partners Foreign Currency Direct plc on 01494 725353 or email sextantproperties@currencies.co.uk

But will it last? Or will everything kick off again once continental Europe returns from its August break and autumnal storms make London traders miserable and angry?  As usual, there are too many balls in the air to allow any solid or reliable forecast of where sterling/euro will be in one – let alone three- months’ time. Let’s count them.

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The greatest and most significant unknown is the fate of the euro itself. After two years of crisis, starting with Greece and now encompassing Italy and Spain,  European leaders are no closer to coming up with an answer to the southern Europe debt problem than they were to start with. They have wheeled out enough plenty of solutions: Too many, some critics would say. The latest was a second bailout for Greece, a country which, as you will recall, initially insisted it did not even need the first one. But they have been doling out aspirin, not remedies. The leaders have paid lip-service to curing the disease while only bothering to treat the most urgent symptoms.

At a bilateral summit meeting earlier in August Angela Merkel and Nicolas Sarkozy parted company with an agreement to improve cooperation between euro zone member states and to impose a tax on financial transactions. There was no mention of any increase to the European Financial Stability Facility, which would be swamped if it had to fund another bailout. They also dismissed the proposal to issue multi-government “euro bonds”, a strategy that many believe is essential. Since then, the European Central Bank has been propping up Spanish and Italian government bonds by the simple expedient of buying them. German President Christian Wulff sees that buying as “legally and politically questionable” and “way beyond the bounds” of the ECB’s mandate but, in the absence of any other plan, it is the only one going.

Compared to the clear and present danger in Euroland, Britain is on a relatively even keel. The incoming government implemented austerity measures more than a year ago, with the intention of bringing government spending and tax receipts back into balance in four years’ time. It will probably not happen within that time frame but the political will is there, in a way that the EU can only dream of. Economic growth in Britain is slow. Gross domestic product expanded by just 0.2% in the second quarter of the year. But Euroland did no better and Germany and France did worse. German growth was just 0.1% over those three months and in France it was 0.0%.

Yet investors still do not prefer the pound to the euro. It is probably because of the pound’s long and undistinguished track record of snatching defeat from the jaws of victory. There might be no crisis at the moment but you can be certain another will be along soon. It is defeatist talk, to be sure, but an awful lot of investors have that mindset and they do not find it easy to hold onto sterling when a cold wind whistles up Threadneedle Street or through Westminster.

Renewed problems in Euroland could allow sterling to make the upward break it apparently deserves. It is more likely, though that in a month’s time we will be looking at a sterling/euro exchange rate remarkably similar to the one we see today.

There is still no enthusiasm for the pound among investors. They see persistent high inflation – 4.2% at the last count – and perennially low interest rates – the Bank rate has been at 0.5% since March 2009 and could quite easily see out the year at the same level. Personal consumption remains weak. One obvious reason for that is that personal incomes are falling: Average earnings rose by 2.3% in the year to May but inflation eroded their value by 4.2%. The net result is that the average family’s spending power fell by -1.8% over the 12 months.

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On the positive side employment is going up, albeit slowly, and the economy is growing, if only at a snail’s pace when the effect of inflation is stripped out. Figures for the second quarter showed gross domestic product expanding, in real terms, by 0.2% over the quarter and by 0.8% in the 12 months to June. It is a pathetic performance but perhaps not as bad as it looks. If inflation were on target at 2% that 0.8% would look more like 3%. Unusual factors such as the royal wedding and its extra bank holiday, the after-effects of the Japanese tsunami, the first phase of Olympics ticket sales and record warm weather also served to dampen growth. Without them the figure would have been appreciably higher, according to the Office for National Statistics.

Also on a positive note the government is sticking to its plan to narrow the gap between tax revenues and public spending. It is a painful process, for sure, and the slower than expected pace of growth makes it highly unlikely that the target of a balanced budget can be achieved by the end of this parliament. Nevertheless, the fiscal position of Britain is improving while in Ireland and southern Europe things are getting worse.

Greece is still the front-runner in the race to spend beyond its income. On top of the €45 billion pledged to it in April last year in the EU/IMF bailout package, EU leaders decided this July to lend another €109 billion or so (the exact number is not yet finally decided). In a nutshell, the strategy for solving Greece’s excessive debt problem it to lend it even more money.

Investors are suspicious about the whole thing. For two years they have been told by Brussels firstly that there was no problem, then that each of a succession of measures would sort out the problems of peripheral Euroland once and for all. This latest proposal from EU leaders does seem to have more teeth than its predecessors but it is hard to avoid the sensation that, once again, it is too little, too late.

The US debt crisis has rather hogged the headlines in the last couple of weeks, distracting attention from the euro zone’s woes. Also, with European leaders away on their summer holidays, it may not be until September that investors finally see some flesh on the bones of what is, so far, no more than a set of bullet points. In the meantime, investors will be left to speculate not about whether Greece will go bust but when it will finally happen and what the effect will be.

Working in the euro’s favour is the European Central Bank’s rigorous approach to inflation. Whatever the problems of Greece, Portugal, Spain, etc., the ECB sees inflation as a threat and is determined to head it off with higher interest rates. It raised its refinancing rate from 1% to 1.25% in April and to 1.5% in July. It is widely expected that there is more to come.

The bottom line is that investors do not much care for either the pound or the euro at the moment. The sterling/euro exchange rate is the same today as it was in early April and in the intervening period it has passed by that level at least once a week, on average.

L’Agence Nationale d’Information pour le Logement (the ANIL for short- the national agency which provides information on housing), published its latest market rate indicator last month,which correspond to the second quarter of 2011.

“The total French mortgage rate rise observed since the end of last year is still lower to a certain point, says the ANIL, but it is still enough to dispel the effects of the decreasing rates, throughout 2010.”

Thus by the end of May 2011 we found ourselves, according to the ANIL, with rates close to the those of the last quarter of 2009.

This hasn’t so far had an impact on the number of new mortgages, which according to the Banque de France, keep rising.

The ANIL bases its findings on the following:

- Information that comes direct from nine banks: Credit Foncier, Caisse d’Epargne, la Banque Postale, Credit Mutuel, Credit Agricole SA, BNP Paribas, Credit Immobilier de France, LCL Le Credit Lyonnais and UCB/Cetelem ;

- Social access, fixed rate and variable rate mortgages

- Mortgages that last 15 years.

For more information about French Mortgages, you can contact our team of brokers on 020 7428 4918 or by email : info@sextantmortgages.com

Outside the euro zone scepticism is by no means universal but nevertheless widespread. A common concern is that the current bailout scheme, cobbled together in haste last year, is no more than a temporary fix. Who will lend money to an even more heavily-indebted Greece when Brussels turns off the tap? The fear is that the bailout will merely postpone the day of reckoning, leaving Greece with an extra €250 billion of debts and an exceedingly hacked-off populace.

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By and large, investors would prefer to believe the politicians. Few of them would benefit from the financial crisis that might well attend a Greek bankruptcy. Most would probably suffer losses as a result of the economic slowdown or recession that could follow. So they tend look on the bright side, focusing on the likelihood of higher euro interest rates instead of the off-chance of catastrophe. But they cannot totally ignore the possibility, hence the weekly changes of sentiment they have been demonstrating for the last month and a half.

Since the beginning of May the sterling/euro exchange rate has covered a six-cent range, with half a dozen major reversals, without actually going anywhere. On 2 May the pound traded at €1.1250; on 3, 10 and 23 June it traded at an identical level. Most of these swings have been caused by the ebb and flow of pro- and anti-euro sentiment. Occasionally they have been the result of sterling’s well-practised ability to shoot itself in the foot.

In late June the Bank of England’s monetary policy committee published the minutes of its June meeting. As expected, only two MPC members voted for the interest rate increase that would enhance the value of sterling in the eyes of investors. However, also – and unexpectedly – in the minutes were suggestions that rates will not go up this side of Christmas and that there might even be another round of asset purchases to stimulate the economy. The asset purchase programme (quantitative easing, printing money, call it what you will) was not popular with investors when the bank bought £200 billion of government and corporate bonds. For more than year investors have assumed that there would be no extension of the scheme. The minutes of the MPC meeting suggested that .an extension of the programme remains on the table and investors were less than delighted.

The coming weeks could be challenging ones for the euro. First the Greek parliament must vote to approve €76 billion of new austerity measures. Second, it must sell the idea to voters. Third, it must persuade the EU that it will do more than pay lip-service to the spending cuts and privatisations. Fourth, holders of Greek government debt must be convinced that they will be better off renewing their loans than taking the 30 cents in the euro (or whatever it might turn out to be) that they would get in the event of a default.

It is not an impossible task but it is not an easy one. Expect more swings for sterling/euro as each new development brings either a cheer or a hiss.

Mortgages:
You can easily obtain a French mortgage to purchase your property in France. If you are buying a home in France, there are three ways to raise the mortgage: against an existing UK property, providing there is sufficient equity; against the French property; or a mixture of both.

At first, there are certain things a potential buyer needs to know:

When you sign the reservation contract at the sales office, you must have already decided whether or not you are going to take out a mortgage because you will be asked to write this in French on the “compromis de vente” by the agent.

If you are taking a mortgage out, you must have it arranged and agreed before you sign your “Acte de Vente” (deed of Sale) at the Notary’s, usually two to three months after you have signed your reservation contract (“compromis de vente”).

Mortgage options:
There are various options as to where to obtain your mortgage or funding to finance your new purchase.

Mortgage through a French bank:
There are considerations involved in borrowing money in another currency. With the right advice, however, even the most inexperienced borrower can successfully buy his dream home.

French banks are willing to lend money at very attractive rates and terms. As a non-resident you can currently obtain a 15 year mortgage for 80% of the property value with a 3.90% fixed interest rate (French residents can borrow up to 100% of the property value, European residents up to 80%, and non-EU residents up to 60-65%).

French mortgages are not based on the UK model of multiple incomes. Typically the calculation works on the principle that the total of the French mortgage payment, plus any UK mortgage or rent, plus any other long-term borrowings, should not exceed a third of the buyer’s gross monthly income.

The actual process of applying for mortgages in France, again is not difficult, and usually takes at most 2 to 3 weeks but can be done even quicker.

In summary, obtaining a mortgage for a French property is straightforward, especially with our help.

Re-mortgaging
It is common to re-mortgage in the UK to raise money for a variety of purposes. This is not so common with French lenders, although some are starting to offer mortgages on this basis, allowing the borrower to take advantage of rising values and equity. However, generally speaking, if you think you will need additional funds later, it is better to raise these at the time of purchase, when it may be easier to obtain the finance.

Money Transfer
You can transfer your money with your current bank or through Moneycorp, a company specialising in Overseas Money Transfers.

When living in France, you will likely have to make ongoing money transfers. Perhaps to pay for a French mortgage, transfer your pension or pay for ad-hoc maintenance and living expenses from your UK bank account.

Moneycorp, are one of the UK’s leading foreign exchange specialists and can help with all your money transfer requirements. They have a product called the Regular Payment Plan – which can help with your monthly mortgage payments or pension transfers – as well as an online solution to sending funds to France, similar to online banking but with fantastic exchange rates.
To find out more about Moneycorp, please click here or on the image below.

Opening a bank account in France
Opening a bank account in France is essential to pay the monthly instalments on your mortgage. In order to open an account in France, you just have to bring a few documents (copy of your passport, proof of address and bank statements), fill out an account application form and the bank will send you your account details with a RIB (Relevé d’Identité Bancaire or bank account identity slip). It is that simple! To find out more about French Mortgages call us today on 020 7428 4910 or email us at mortgage@sextantproperties.com. We can assist you in arranging your finance to buy your dream property in France.