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Weakened Euro Brings British Investors Back to France and Spain - 2 March 2010

Brits are watching currency exchange rates carefully, playing it safe, and going with what they know when purchasing overseas property, real estate experts say.

Although the sterling has been performing poorly against the dollar and erratic against the euro lately, economists are predicting the sterling to eventually pull ahead and advise buyers to watch for slight increases. For example, earlier this week, there was 0.05 percent rise in buying euros with sterling, a scenario likely to be repeated more often in coming months.

A weakened euro equals great investment opportunities for Brits buying properties in high-priced European countries like Spain and France, say property experts. Most of the online property searches made by Britons last year were for Spain and France, and so far this year, one real estate company has reported that more than 70 percent of its enquiries for France have come from the U.K. Areas of interest include the Alps, Paris and the south of France, as buyers await a warm spring.

Paying for overseas property with sterling is not a new maneuver for Brits. But as rates fluctuate, many economic experts advise that buyers look into securing euro-denominated debt against a euro-valued property asset.

By taking out a euro mortgage on a French property, the currency and the liability of the asset are matched, experts say, therefore, avoiding the effects of fluctuating exchange rates. Also, once the sterling strengthens again, the cost of the mortgage will drop.

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