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Spain a better bet than ever - 13 August 2007

It will have been hard to avoid the recent news of the billions of pounds of value that has been wiped from the value of shares on the London and New York stock markets over the past week. While markets have started to recover at the start of this week on the back of intervention from central banks to prop up share values, it was estimated that the UK market alone lost over three per cent of its value on Friday morning alone.

The problems are primarily down to worries over the health of the sub-prime mortgage market – the practice of lending to those groups of people who would ordinarily struggle to be approved for mortgages. This, coupled with the increasingly unmanageable levels of debt in the world’s leading economies, has put pressure onto the banking system. In turn, this could add pressure on to the housing markets of those countries affected by sub-prime markets.

The UK property market is one of those that could feel the pressures on the banks, which means that many investors may look overseas to place their funds in a more secure environment. One of the best markets in which to do this, particularly if you’re looking to fund the purchase with a local mortgage, is Spain. Following the recent troubles of the sub-prime lenders, leading banks in Spain have stated that their exposure to this market is virtually nil.

Major Spanish banks BBVA and Banco Santander have asserted that the risks of them being caught up in the sub-prime problems are negligible at worst. Other Spanish banks did not comment on the report on business news website Forbes.com, but are thought to be in a similar position. This is the kind of good news that the Spanish residential property market needs, given the recent turbulence of property companies on the Spanish stock market.

 

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