Foreign currency mortgage performance analysed

New research from Close Treasury reveals that British people who bought overseas properties in second home and investment hotspots without a foreign currency mortgage four years ago will, on the whole have made significant financial gains, despite the recent volatility in global property prices.

According to Close Treasury, those who bought an Italian property in Euros in June 2005 would have seen the Sterling value of this increase by around 65%, four years later, aided by a 30% rise in property prices over that period. This increase was supported by the increase in value of the Euro by 27% compared to Sterling over the same period.

It claims that, in the last year alone, a UK investor in the Italian property market could have made a return of over 10%, despite just a 3% increase in local property prices, due to the strength of the Euro.

In the United States a combination of declining house prices and a weakening Dollar since the end of Q2 2005 has resulted in a loss of 5% on investments. But the position could have been far worse for investors as the US property market has since fallen by 13.5% which has been offset by favourable exchange rates for UK investors.

However, UK investors who bought a US property using Sterling in June 2008 and then sold it 12 months later in Dollars and converted back to Sterling, would have made a 21% profit. This is despite US house prices remaining static and a strengthening Dollar during the period.

Likewise those Brits who invested in property in Spain in June 2005 would have seen the Sterling value of their investment increase by 59% four years later, due to a combination of rising property prices and a fall in the value of Sterling against the Euro.

Close Treasury concluudes that the Sterling value of properties bought in Portugal, France, Switzerland and Spain for example in June 2009, were up 24%, 47%, 54% and 59% respectively on the corresponding figure of this year.

Mark Taylor, head of foreign exchange, Close Treasury said: “When British investors calculate the value of an overseas property they bought a few years ago