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80% LTV mortgage for Spanish investors

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As part of a growing trend of British financial institutions offering their services in Spain, Barclays has today announced the launch of a major new mortgage product.

The largest British bank in Spain is now offering holiday home hunters the opportunity to obtain a flexible mortgage which allows property buyers to have 80 per cent of the value of the property as a loan.

This is the highest ever loan to value ratio offered by the bank in Spain, the previous highest was 70 per cent, and it also has the longest ever mortgage term of 30 years.

It is believed that this bold move by Barclays is partly due to its desire to retain its position as the biggest UK bank in the country, a position which has been challenged of late by the launch of Banco Halifax Hispania, the Spanish arm of the UK's largest lender.

However, another reason for the high loan to value offer is due to the Spanish property market itself. Over the last few years, Spanish investors have not received the dramatic surges in value that were seen in the 1990s. Instead, house price growth has been strong and steady, currently residing at 9.7 per cent annually according to the Knight Frank Global House Price Index, reminiscent of a mature housing market such as the UK.

Another possible reason why Barclays is planning to offer foreign property investors longer mortgage terms is that more young people than ever before are looking overseas to invest in the property market.

A recent survey by MRI Overseas Property found that 40 per cent of young Brits are considering ploughing their cash into property abroad rather than focusing on the ever-rising costs of housing at home.

Suzanne Clay, business development manager at Barclays, said: "Barclays continually looks to develop its range of mortgages available to British people wanting to buy property abroad.

"By offering a higher loan to value, and adding flexibility at highly competitive rates, we believe this product will enable many budding overseas property investors to realise their dream of owning a home Spain."

A survey recently published by property and tourism intelligence firm Mintel, estimates that Brits own some 600,000 Spanish homes at present and that this number is growing rapidly.

The report also says that British ex-pats buy a fifth of all newly built houses in Spain; this figure rises to 52 per cent on the tourist favourite of the Costa del Sol.

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