I have been doing some research on the current attitude
of Aylesbury 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 Aylesbury property goes up for starter
homes and that enables other Aylesbury homeowners to move up the property
ladder.
First-time buyers are the life
blood 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 an Aylesbury property is currently standing
at £385,763 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 and the ‘Bank of Mum and Dad’ have been helping with the
deposit. Now, some high street banks are offering mortgage terms of 40 years.
This means first-time buyers could be paying until their mid. 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, Aylesbury 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 further still
However, some observers 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 Aylesbury over the last 50 years,
there have been bubbles. First-time buyers should take heart, since as a country
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 Aylesbury 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’.
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