Second home owners in Britain have recently begun pulling money out of banks in European countries like Spain and France, primarily due to fears about the stability and safety of the euro. Statistics show that the number of people selling euros and buying sterling pounds has increased by more than 150%, indicating that more people are looking to replace their euros with sterling pounds.
In addition, homeowners are also converting less pounds into euros for property upkeep purposes. According to Mark Bodega, HiFX director, homeowners usually spend about 15,000 pounds each year on taxes, home improvement projects, and general upkeep, and that although homeowners would typically convert all of these funds into euros at once, many are now opting to convert less than 3000 pounds at a time. This shows a hesitancy amongst UK homeowners in regards to converting large sums of money into euros simultaneously, most likely resulting from the current eurozone crisis.
Many analysts believe that British homeowners have a right to be weary, as any day the value of their euro holdings could drop significantly, or in an even worse scenario, European banks could collapse causing them to lose all of their euro funds. In order to avoid such an occurrence, homeowners are advised to keep their savings diversified to ensure that each of their accounts are covered by European compensation limits. The current standard compensation limit in the European Union is set at 100,000 euros per account, so account holders are advised not to store any more than that amount in one of their accounts.
Meanwhile, this week the sterling pound hit an 8 month high against the euro, likely resulting from the growing burden of Italy’s struggling debt problems within the eurozone. Mr. Bodega also stated that while some homeowners may have removed all of their savings from the euro currency due to fear of economic collapse, the vast majority are simply worried that the value of the euro may decline, causing their savings to be worth less.
