The £/€ exchange rate hasn’t so favourable to UK buyers in Portugal for over a year now, thanks to the interbank rate hitting £1/€1.22 on February 14th, the second time it has broken the €1.22 barrier in three weeks.
The last time £1 was worth €1.22 since the end of January 2014 was the second week of January 2013, after which it plummeted to lows of €1.14 in March and again in July, before gradually rising throughout the second half of 2013.
Sterling’s performance since the start of this year has been encouraging for UK buyers, with the rate spending the majority of the time above £1/€1.20. The bullish UK economy is expected to help Sterling maintain this level, with some analysts saying it will strengthen further.
Not only does property in Portugal get cheaper to British people as Sterling gains value against the euro, but it also brings down the cost of euro mortgage payments and running costs that come with a Portuguese home.
As an example, the Sterling price of a typical €400,000 townhouse in Vale do Lobo is currently £23,000 cheaper to a UK buyer than it was at the end of July last year, when the rate was £1/€1.14. Meanwhile, a typical monthly mortgage payment of €1,500 has come down to £1,230 from £1,316 for the same reason.
British people who need to send money to Portugal to purchase a property in the Algarve, or make regular payments between a UK Sterling bank account and euro account in Portugal are advised to use a FCA-authorised currency exchange specialist rather than asking their bank direct to make the transfers, as they receive a better exchange rate and more personal service.