Friday, July 14, 2017 Property FOCUS
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The Kingsbridge Property Market, and First Time Buyers
e have been doing some research on the current attitude of Kingsbridge first-time buyers. First-time buyers are so important for both landlords and home- owners. 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 Kingsbridge property goes up for starter homes and that enables other Kingsbridge homeowners to move up the property ladder. First-time buyers are the life blood of the prop- erty market. They are, however the most sus- ceptible to interest rate rises and the affordabili- ty of mortgages. With that in mind, let us see what is happening to them…
The average value of a Kingsbridge property is currently standing at £394,188 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 common- place 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 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 - 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, Kingsbridge property prices have continued to rise and this rise has not been pro-rata with wages, therefore, first- time buyers are looking for bigger loans. If this development continues, the only way repay- ments 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 genera- tion of debt if the house price bubble bursts. Interestingly, when I looked at what had hap- pened to average property values in Kingsbridge over the last 50 years, there have been bubbles. First-time buyers should take heart, since as a county we have always recov- ered from it a few years later.
What if interest rates rise? Well looking at his- toric 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 Kingsbridge first-time buyers see
buying a home as a long-term deci- sion, based on the last 50 years, they should be just fine!
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