I have been doing some research, looking both at National and Regional reports on the demand and supply of property and people together with future projections on the economy, population and family demographics with some interesting results. According to the Office of National Statistics, in the last financial year nationally, private renting grew by 74,000 households, whilst the owner occupied dwelling stock increased by 101,000 and social (aka council and housing association) stock increased by 12,000 dwellings.
It was the private rental figures that caught my eye. With eight or nine years of recovery since the Credit Crunch, economic recovery and continuing low interest rates have done little to setback the mounting need for rented housing. In fact, with house price inflation pushing upwards much quicker than wage growth, this has meant to make owning one’s home even more out of reach for many Millennials, all at a time when the number of council/social housing has shrunk by just over 2.5% since 2003, making more households move into private renting.
There are 7,711 people living in 3,300 privately rented
properties in Tamworth.
In the next nine years, looking at the future population growth statistics for the Tamworth area and making careful and moderate calculations of what proportion of those extra people due to live in Tamworth will rent as opposed to buy, in the next ten years, 3,305 people (adults and children combined) will require a private rented property to live in.
Therefore, the number of Private Rented homes in Tamworth will need to rise by 1,414 households over the next nine years,
That’s 157 additional Tamworth properties per year that will need to be bought by Tamworth landlords, for the next nine years to meet that demand.
… and remember, I am being conservative (with a small ‘c’) with those calculations, as demand for privately rented homes in Tamworth could still rise more abruptly than I have predicted as I would ask if Theresa May’s policies of building 400,000 affordable homes (which would syphon in this 5-year Parliamentary term is rather optimistic, if not fanciful?
So, one has to ask wonder if it was wise to introduce a buy to let stamp duty surcharge of 3% and the constraint on mortgage tax relief could curtail and hold back the ability of private landlords to expand their portfolios?
Well a lot of landlords are taking on these new hurdles to buy to let and working smarter. Buying the property at the right price and using an agent to negotiate on your behalf (we do this all the time) … and the 3% stamp duty level isn’t an issue. Incorporating your property portfolio into a Limited Company is also a way to circumnavigate the issues of mortgage tax relief (although there are other hurdles that need to be navigated on that tack), but just look at the growth of proportion of Buy to Let properties in the Country since the Summer of 2016 … something tells me smart Landlords are seeing these challenges as just that … challenges which can be overcome by working smarter.
I have a steady stream of Tamworth landlords every week asking me my opinion on the future of the Tamworth property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters … it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would you?).
Until next time, happy house hunting.
Facebook – – https://www.facebook.com/hallandthompsonestateagents
Twitter – https://twitter.com/hallandthompson
Website – https://www.hallandthompson.co.uk
A little bit of good news this week on the Tamworth Property Market as recently released data shows that the number of first time buyers taking out their first mortgage in 2017 increased more than in any other year since the global financial crisis in 2009. The data shows there were 361 first time buyers in Tamworth, the largest number since 2006.
I expect in 2018 that this increase of first time buyers will level out and maybe dip slightly as, nationally, figures demonstrate that first time buyer’s average household income was £40,691 and this represented 17.3% of their take home pay. Although, it might surprise readers that it is actually cheaper to buy than it is to rent at the ‘starter home’ end of the housing market. Many of you can remember mortgage rates at 12% … even 15%. Today, at the time of writing this article, I found on the open market, 189 first time buyer mortgages at 95% (meaning only a 5% deposit was required) with 3 year fixed rates from a reputable High Street bank at 2.49% … they even did a 3 year fixed rate 100% mortgage for 2.89%!
Interestingly, looking at the other end of the market, the buy-to-let investment in Tamworth was subdued, with only 74 buy-to-let properties being purchased with a mortgage. However, I must stress, whilst there is no hard and fast data on the total numbers of landlords buying buy-to-let, as HM Treasury believes only 30% to 40% of buy-to-let property is bought with a mortgage. This means there would have been further cash only buy-to-let purchases in Tamworth – it’s just that the data isn’t available at such a granular level.
In terms of the level of mortgage debt in Tamworth, looking specifically at the B77 to B79 postcodes, there has been a steady rise in borrowing over the last couple of years.
This is pleasing to see, as new mortgage debt is created by first time buyers, buy-to-let landlords and home movers themselves, that is being roughly equalled by the amount being paid off with mature mortgaged homeowners in their 50’s and 60’s finally paying off their mortgage.
So, what does all this mean for the Tamworth Property Market? Well, the stats paint a picture, but they don’t inform us of the whole story. The upper end of the Tamworth property market has been weighed down by the indecision around the Brexit negotiations and rise in stamp duty in 2014, when made it considerably more expensive to buy a home costing more than £1m. The middle part of the Tamworth property market has been affected by issues of mortgage affordability and lack of good properties to buy, as selling prices have reached the limit of what buyers can afford under existing mortgage regulations. The lower to middle Tamworth property market was hit by tax changes for buy-to-let landlords, although this has been offset by the increase in first time buyers.
If you are in the market and selling now and want to ensure you get your Tamworth property sold, the bottom line is you have to be 100% realistic with your pricing from day one and you might not get as much as you did say a year ago (but the one you want to buy will be less – swings and roundabouts?). I know it’s not comfortable hearing that your Tamworth home isn’t worth as much as you thought, but Tamworth buyers are now unbelievably discerning.
So, if you are thinking of selling your Tamworth property in the coming months, don’t ask the agent out a few days before you want to put the property on the market, get them out now and ask them what you need to do to ensure you get maximum value in the shortest possible time. I, like most Tamworth agents, will freely give that advice to you at no cost or commitment to you.
if you would like to read more articles on my thoughts on the Tamworth property Market – please visit the Tamworth Property Market Blog
If you want to learn about the Tamworth Property Market , one source for information is the Tamworth Property Blog authored by yours truly at https://www.tamworthpropertyblog.co.uk
Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Tamworth property market.
With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 3.5% in Tamworth, which has contributed to maintain a decent level demand for property in Tamworth in 2017 (interestingly – an impressive 1,229 Tamworth properties were sold in last 12 months), whilst finally, the number of properties for sale in the town has remained limited, thus providing support for Tamworth house prices, meaning …
Tamworth Property Values are 11.3% higher than a year ago
However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.
In terms of what will happen to Tamworth property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.
Nevertheless, the bottom line is Tamworth homeowners and Tamworth landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the last 8 years, the Central London property market has been in a world of its own (Central London house prices have grown by 89.6% in those last 8 years, whilst in Tamworth, they have only risen by 35.5%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.
Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact … I am sure we can get through this together as well?
Oh, and house prices in Tamworth over the next 12 months? I believe they will end up between 0.4% lower and 1.2% higher, although it will probably be a bumpy ride to get to those sorts of figures.
If you would like to read more articles on my thoughts on the Tamworth property Market – please visit the Tamworth Property Market Blog
If you want to learn about the Tamworth Property Market , one source for information is the Tamworth Property Blog authored by yours truly at https://www.tamworthpropertyblog.co.uk
The mind-set and tactics you employ to buy your first Tamworth buy to let property needs to be different to the tactics and methodology of buying a home for yourself to live in. The main difference is when purchasing your own property, you may well pay a little more to get the home you (and your family) want, and are less likely to compromise. When buying for your own use, it is only human nature you will want the best, so that quite often it is at the top end of your budget (because as my parents always used to tell me – you get what you pay for in this world!).
Yet with a buy to let property, if your goal is a higher rental return – a higher price doesn’t always equate to higher monthly returns – in fact quite the opposite. Inexpensive Tamworth properties can bring in bigger monthly returns. Most landlords use the phrase ‘yield’ instead of monthly return. To calculate the yield on a buy to let property one basically takes the monthly rent, multiplies it by 12 to get the annual rent and then divides it by the value of the property.
This means, if one increases the value of the property using this calculation, the subsequent yield drops. Or to put it another way, if a Tamworth buy to let landlord has the decision of two properties that create the same amount of monthly rent, the landlord can increase their rental yield by selecting the lower priced property.
To give you an idea of the sort of returns in Tamworth…
Now of course these are averages and there will always be properties outside the lower and upper ranges in yields: they are a fair representation of the gross yields you can expect in the Tamworth area.
As we move forward, with the total amount of buy to let mortgages amounting to £199,310,614,000 in the country, landlords need to be aware of the investment performance of their property, especially in the era of tax increases and tax relief reductions. Landlords are looking to maximise their yield – and are doing so by buying cheaper properties.
However, before everyone in Tamworth starts selling their upmarket properties and buying cheap ones, yield isn’t the only factor when deciding on what Tamworth buy to let property to buy. Void periods (i.e. the time when there isn’t a tenant in the property between tenancies) are an important factor and those properties at the cheaper end of the rental spectrum can suffer higher void periods too. Apartments can also have service charges and ground rents that aren’t accounted for in these gross yields. Landlords can also make money if the value of the property goes up and for those Tamworth landlords who are looking for capital growth, an altered investment strategy may be required.
In Tamworth, for example, over the last 20 years, this is how the average price paid for the four different types of Tamworth property have changed…
- Tamworth Detached Properties have increased in value by 229.3%
- Tamworth Semi-Detached Properties have increased in value by 252.1%
- Tamworth Terraced Properties have increased in value by 237.3%
- Tamworth Apartments have increased in value by 243.2%
It is very much a balancing act of yield, capital growth and void periods when buying in Tamworth. Every landlord’s investment strategy is unique to them. If you would like a fresh pair of eyes to look at your portfolio, be you a private landlord that doesn’t use a letting agent or a landlord that uses one of my competitors – then feel free to contact me and let’s have a chat. What do you have to lose?
“What’s happening to the Tamworth Property Market” is a question I am asked repeatedly. Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Tamworth property market – but many small micro-property markets?
According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.
For ease, I have named them the …
- ‘lower’ Tamworth Property Market.
- ‘lower to middle’ Tamworth Property Market.
- ‘middle’ Tamworth Property Market.
The ‘lower’ and ‘lower to middle’ sectors of the Tamworth property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Tamworth property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Tamworth property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.
Some of you may be interested to know how I have classified the three sectors ..
- ‘lower’ Tamworth housing market – the bottom 10% (in terms of value) of properties sold
- ‘lower to middle’ Tamworth housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
- ‘middle’ Tamworth housing market – which is the median in terms of value
…. and if one looks at the figures for Tamworth Borough Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.
|Tamworth Borough Council Property Market – Sold Prices||Price Paid in 1995||Price Paid in 2017||Percentage Uplift
1995 – 2017
|Lower (Bottom 10%)||£32,000||£110,000||243.75%|
|Lower to Middle (Lower Quartile)||£39,000||£131,000||235.90%|
|Middle (The Median)||£49,954||£178,445||257.22%|
You can quite clearly see that it is the ‘middle’ market that has performed the best.
You might ask, what do all these different figures mean to homeowners and landlords alike? Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘lower to middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘middle’ market percentage uplift), to the ‘lower to middle’ 1995 housing market figure, the 2017 figure of £131,000, would have been £139,316 instead.
Now, I have specifically not mentioned the upper reaches of the Tamworth housing market for several reasons. Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Tamworth’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Tamworth property market – looking at the stats for the up-market Tamworth property market from Land Registry, only 6 properties in Tamworth (and a 3 mile radius around it) have sold for £1,000,000 or more since 1997.
So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Tamworth Property Market, but many Tamworth “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my blog .. https://www.tamworthpropertyblog.co.uk it’s free to do so and I’m sure you wouldn’t want to miss out – would you?
I would love to know if you have spotted any micro-property markets in Tamworth.
Email me on firstname.lastname@example.org or give me a call on 07531484956. We can always meet up for a chat and a coffee, we can even walk the dog.
When you come to sell or purchase a house the location is probably the most important factor with the condition coming in a close second. It’s these factors that determine the value of a property and how much one is willing to pay to live there.
We have most likely all seen the property programmes on television and with Homes under the Hammer being as popular as every, many people are either looking to add to their retirement pot after the government stuffed us big time or they are hoping to become property tycoons.
Sellers need to consider a few simple things when selling a property in need of refurbishment i.e clearing up the gardens – that foot high grass will put prospective buyers off. How about ensuring there are no rusting cars on the driveway, discarded or broken childrens toys or bins overflowing with rubbish. You get the idea! inexpensive but certainly worthwhile small things, can be be carried out to ensure the front of the property alone does not deter potential buyers from crossing the threshold.
Are the renovation works likely to exceed several thousand pounds and is the write up on the property a true and factual piece of writing.
It doesn’t matter what price the vendor is hoping to achieve, if the surveyor has no comparable prices to work on, the property may be down valued and the purchaser may struggle to acquire the mortgage required on the property.
So now you have a few very interested parties, which way do you turn, who’s going to be your choice of the day.
If you are selling your property through an agent, the agent must carry out due diligence on the buyers market position – do they have a property to sell and if so is it being marketed yet. Do they require a mortgage, have they a mortgage in principal already. Are they experienced at refurbishing properties and the bigger picture – do they have planning consent for their 10 bed home of multiple occupation? A good agent will find out as much information as possible about the buyer and what they are hoping to achieve with the property.
The seller will have then have a uniformed approach on each prospective buyer and be able to make their decision based upon the information from the agent.
Which ever purchaser you decide to go with, there are no guarantees that things will run smoothly from start to finish or that they will not pull out of the transaction, you can only do your best and choose an agent that works for you.
If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Tamworth Property Market, together with regular postings on what I consider the best buy to let deals in Tamworth (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch!
Over the last 12 months, the UK has decided to leave the EU, have a General Election with a result that didn’t go to plan for Mrs May and to add insult to injury, our American cousins elected Donald Trump as the 45th President of the United States. It could be said this should have caused some unnecessary unpredictability into the UK property market.
The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the most thriving areas of the Country. Repossessions too are also at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have resulted in…
Property values in Tamworth according to the
Land Registry are 7.34% higher than a year ago
So, what does all this mean for the homeowners and landlords of Tamworth, especially in relation to property prices moving forward?
One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.
Roll the clock back to 2007, and nobody had heard of the term ‘credit crunch’, but now the expression has entered our everyday language. It took a few months throughout the autumn of 2007, before the crunch started to hit the Tamworth property market, but in late 2007, and for the following year and half, Tamworth property values dropped each month like the notorious heavy lead balloon, meaning …
The credit crunch caused Tamworth property values to drop by 16.8%
Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy there were six successive interest rates drops between October 2008 and March 2009; this resulted in interest rates falling from 5% to 0.5%!
Thankfully, after a period of stagnation, the Tamworth property market started to recover slowly in 2011 as certainty returned to the economy as a whole and Tamworth property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Tamworth from the post Credit Crunch 2009 dip and are now 41.9% higher than they were in 2009.
Now, as we enter the summer of 2017, with the Conservatives having been re-elected on their slender majority, the Tamworth property market has recouped its composure and in fact, there has been some aggressive competition among mortgage lenders, which has driven mortgage rates down to record lows. This is good news for Tamworth homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered. For example, last month, HSBC launched a 1.69% five-year fixed mortgage!
Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to an all-time high in the UK.
In the Tamworth postcodes of B77, B78 & B79, if you added up everyone’s mortgage, it would total £1,199,374,481!
Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?
In my modest opinion, especially if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level … and that is why I consider it important to highlight this to all the homeowners and landlords of Tamworth. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Tamworth.
If you are interested in the Tamworth Property Market, you might learn something by visiting the blog. https://www.tamworthpropertyblog.co.uk
According to my research, of the 30,379 properties in Tamworth, 13,351 of those properties have mortgages on them. 91.8% of those mortgaged properties are made up of owner-occupiers and the rest are buy to let landlords (with a mortgage).
… but this is the concerning part .. 2,884 of those Tamworth mortgages are interest only. My research also shows that, each year between 2017 and 2022, 35 of those households with interest only mortgages will mature, and of those, 9 households a year will either have a shortfall or no way of paying the mortgage off. Now that might not sound a lot – but it is still someone’s home that is potentially at risk.
Theoretically this is an enormous problem for anyone in this situation as their home is at risk of repossession if they don’t have some means to repay these mortgages at the end of the term (the typical term being 25 to 35 years). Banks and Building Societies are under no obligation to lengthen the term of the mortgage and, when deciding whether they are prepared to do so or not, will look at it in the same way as someone coming to them for a new mortgage.
Back in the 1970’s and 1980’s, when endowment mortgages were all the rage, having an endowment meant you were taking out an interest only mortgage and then paying into an endowment policy which would pay the mortgage off (plus hopefully leave some profit) at the end of the 25/35-year term. There were advantages to that type of mortgage as the monthly repayments were lower than with a traditional capital repayment and interest mortgage. Only the interest, rather than any capital, is paid to the mortgage company – but the full debt must be cleared at the end of the 25/35-year term.
Historically plenty of Tamworth homeowners bought an endowment policy to run alongside their interest only mortgage. However, because the endowment policy was a stock market linked investment plan and the stock market poorly performed between 1999 and 2003 (when the FTSE dropped 49.72%), the endowments of many of these homeowners didn’t cover the shortfall. Indeed, it left them significantly in debt!
Nonetheless, in the mid 2000’s, when the word endowment had become a dirty word, the banks still sold ‘interest only’ mortgages, but this time with no savings plan, endowment or investment product to pay the mortgage off at the end of the term. It was a case of ‘we’ll sort that nearer the time’ as property prices were on the rampage in an upwards direction!
Thankfully, the proportion of interest only mortgages sold started to decline after the Credit Crunch, as you can see looking at the graph below, from a peak of 43.81% of all mortgages to the current 8.71%.
Increasing the length of the mortgage to obtain more time to raise the money has gradually become more difficult since the introduction of stricter lending criteria in 2014, with many mature borrowers considered too old for a mortgage extension.
Tamworth people who took out interest only mortgages years ago and don’t have a strategy to pay back the mortgage face a ticking time bomb. It would either be a choice of hastily scraping the money together to pay off their mortgage, selling their property or the possibility of repossession (which to be frank is a disturbing prospect).
I want to stress to all existing and future homeowners who use mortgages to go in to them with your eyes open. You must understand, whilst the banks and building societies could do more to help, you too have personal responsibility in understanding what you are signing yourself up to. It’s not just the monthly repayments, but the whole picture in the short and long term. Many of you reading my blog ask why I say these things. I want to share my thoughts and opinions on the real issues affecting the Tamworth property market, warts and all. If you want fluffy clouds and rose tinted glasses articles – then my articles are not for you. However, if you want someone to tell you the real story about the Tamworth property market, be it good, bad or indifferent, then maybe you should start reading my blog regularly.
For more thoughts on the Tamworth Property Market – visit the Tamworth Property Blog on http://www.Tamworthpropertyblog.co.uk
50 years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year Sweden switched from driving on the left-hand side to the right-hand side of the road. The average value of a Tamworth property was £2,775, interest rates were at 5.5% and The Beatles released one of my favourite albums – their Sgt Peppers album … but what the hell has that to do with the Tamworth property market today?? Quite a lot actually … so with my CD Player turned up loud – let me explain my friends!
I have been doing some research on the current attitude of Tamworth 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 Tamworth property goes up for starter homes and that enables other Tamworth homeowners to move up the property ladder.
First-time buyers are the lifeblood of the 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 a Tamworth property is currently standing at £209,292 and 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.
Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 and 35 years in length as the ‘Bank of Mum and Dad’ have been 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 that other 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, Tamworth property prices have continued to rise more than wages, therefore, first-time buyers are looking for bigger loans. If this development continues, the only way repayments can remain reasonable is by increasing the term of the loan.
However, some commenters have said there are worries the mortgage companies are lending money over such a long term, they threaten 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 Tamworth over the last 50 years, there have been bubbles. First-time buyers should take heart, since as a county we have always recovered from it a few years later.
What if interest rates rise? Well looking at historic UK interest rates, the current rate of 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider fixing the rate to cushion any future potential interest rate rises (since they can only go in one direction when they do change). If Tamworth first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should be just fine!
Before I go, a final thought for property buyers in Sweden, the land of Volvo and Abba. 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-loving Swedish friend’s average mortgage length is 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 105 years. Either way, that’s a lot of Money, Money, Money (Abba again – 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 the Beatles and Abba fans in Tamworth – a bit of light hearted fun albeit on serious topic.
Looking to sell or rent your property, the time is now when Summer is in the air.
Hall and Thompson are still busy valuing and listing new properties for sale and rent. So why not get a head start before summer ends and get your property on the market now. Please call 01827 425195 to book your valuation now.