Comparing foreign currency mortgage performance

Interest and currency exchange rate movements

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Historical performance of currency mortgages

Use the graphs below to assess the performance of the following against a Sterling mortgage:

• A United States Dollar Mortgage (usd mortgage)
• A Euro Mortgage
• A Swiss Franc Mortgage
• A Japanese Yen Mortgage

Graph 1 below reflects UK interest rates over a five year period in relation to the relevant currency's equivalent of the London Inter Bank Offer Rate (LIBOR). The LIBOR rate used in this example is the 3 month LIBOR rate. The lenders load the LIBOR rate with a margin to cover their costs and provide a profit.

Graph 2 below illustrates the exchange position of four major currencies in relation to UK Sterling over a five year period. It is important to note the situation regarding a Japanese Yen mortgage (JPY) as the graph may suggest that it has been comparatively stable (base of graph). However, like all currencies, it has fluctuated over the period. An increase (or decrease) of .001 in the value of the Yen will have a noticeable effect on the Sterling equivalent mortgage.

    Graph 1

    Graph 2

Historical winners in foreign currency mortgage performance

A Japanese Yen mortgage or a Swiss Franc mortgage would both have performed well compared with a Sterling mortgage over the time period covered.