Fifty 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 Warrington
property was £2,746, interest rates were at 5.5%!
The Beatles released one of my favourite albums – their Sergeant Peppers
album... but what the hell has that to do with the Warrington property market
today?
Quite a lot actually. So, with my music turned up
loud, let me explain my friends!
First Time
Buyers in Warrington
I
have been doing some research on the current attitude of Warrington 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 Warrington property goes up for starter
homes and that enables other Warrington 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 Warrington property is currently standing at £207,055 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 60s. 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 1970s. After all, life expectancy
for a male then was exactly 69 years and
today its 79 years and 5 months!
Rising
Warrington House Prices
Over the last ten years, Warrington 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 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 Warrington 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 Warrington 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 friends’ 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 1980s Madness song ‘Our House’. My
apologies to all the Beatles and Abba fans in Warrington - a bit of light
hearted fun… albeit on serious topic.
You can always keep an eye on my blog for any properties I feel
will make a good buy to let opportunity, or if you are after a second opinion
then email me on manoj@hamletwarrington.co.uk or call on 01925
235338. If you are in the area, feel free to pop into the office – we are based
on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking
and the kettle is always on.
Don't forget
to visit the links below to view back dated deals and Warrington Property News.
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