The Ashford Property Market, The Beatles, Sweden and the 50 year mortgage

 

50 years ago, in 1967, the first human heart transplant was performed in South Africa by Dr Christiaan Barnard. In the same year Sweden switched from driving on the left to the right-hand side of the road, the average value of an Ashford property was £4,209, interest rates were at 5.5%, and The Beatles released their famous album, Sergeant Pepper – but what the hell has all that to do with the Ashford property market today?? Quite a lot actually, so – with my CD Player turned up to 11 – let me explain, my friends!

I have been doing some research on the current attitude of Ashford first-time buyers. First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). If they buy, demand for Ashford property goes up for starter homes and that enables other Ashford homeowners to move up the property ladder.

First-time buyers are the life blood of a property market. They are, however the most susceptible to interest rate rises and the affordability of mortgages. With that in mind, let us see what is happening to them…

The average value of an Ashford property is currently standing at £317,389 with UK interest rates at 0.25%. As each year goes by, it appears the age of the everlasting mortgage has started to emerge, prompted by these first-time buyers, eager to get a foot on the housing ladder. I was reading a report a few days ago where some mortgage companies confessed that the battle to gain big returns from the property market has led to mortgages that will take considerably longer than the customary 25 years to pay off.

Longer Term Loans

Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 or 35 years in length with the ‘Bank of Mum and Dad’ helping with the deposit (Beatles Sgt Pepper song – “With a Little Help from My Friends”). Now, some high street banks are offering mortgage terms of 40 years. This means first-time buyers could be paying until their mid-60’s – I can hear another great track from the same album “When I’m Sixty-Four” ringing in my ears! So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970’s. After all life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!

Over the last ten years, Ashford property prices have continued to rise faster than wages, with first-time buyers tending to look for larger loans. If this trend continues, the only way monthly repayments can remain reasonable is by increasing the term of the loan.

However, some commentators have raised concerns that mortgage companies lending money over such a long term threatens leaving some first-time buyers with a generation of debt if the house price bubble bursts. Interestingly, when I looked at what had happened to average property values in Ashford over the last 50 years, there have been bubbles. First-time buyers should take heart however since, as a country, the market has always recovered from it a few years later.

Interest Rates

What if interest rates rise? Well looking at historic UK interest rates, the current 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider a fixed rate loan to cushion any future interest rate rises (when they do change, they can only go one direction). If Ashford’s first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should do just fine!

Before I go, a final thought for property buyers in Sweden, the land of Volvo, Abba and Ikea. As Swedish property prices are so high, Swedish Regulators announced last year limits on the length of Swedish mortgage terms. They don’t bother with 50-year mortgages (On and On and On – Abba).

No, our Volvo and flat-pack-furniture loving Swedish friends’ average mortgage length is  a staggering 140 years (this is not a typo). Although such mortgages have had their Waterloo (Abba), regulators have significantly reduced the maximum term of a Swedish mortgage to a mere 105 years. Either way, that’s a lot of Money, Money, Money (Sorry!) to pay back!

Now I will leave you in peace as I listen to the 1980’s Madness song ‘Our House’. My apologies to all Beatles and Abba fans in Ashford – a bit of light hearted fun albeit on a serious topic.

Taylors Residential Lettings Limited, Company no. 6002742, Regd Office: Suite 1, Invicta Business Centre, Monument Way, Ashford TN24 0HB