Eight years ago, in the summer of 2007, hardly anyone had
heard of the term ‘credit crunch’, but now the expression has entered our daily
language and even the Oxford Dictionary.
It took a few months throughout the autumn of 2007, before the crunch
started to hit the Royal Tunbridge Wells Property market, but in November /
December 2007, and for the following seventeen months, Royal Tunbridge Wells
property values dropped each and every month like the proverbial stone. The
Bank of England soon realised in the late summer of 2008 that the British
economy was stalling under the continued pressure of the Credit Crunch.
Therefore, between October 2008 and March 2009, interest rates dropped six
times in six months from 5% to 0.5% to try and stimulate the British
economy.
Thankfully, after a period of stagnation, the Royal
Tunbridge Wells property market started to recover slowly in 2010, but really
took off strongly in late 2013 / early 2014 as property prices started to
rocket. However, the heat was taken out of the market in late 2014/early 2015,
with the new mortgage lending rules and some uncertainty, when some people had
a dose of pre–election nerves.
With the Conservatives having been re-elected in May, the
Royal Tunbridge Wells property market regained its composure and in fact, there
has been some ferocious competition among mortgage lenders, which has driven
mortgage rates to record lows. Whilst I have no actual figures to back this up,
I know an awful lot of long serving bank managers, mortgage arrangers and
people in the finance industry, all of whom have told me on previous occasions
when interest rates rose (1987, 1992, 1997 and 2003), it wasn’t the first rate
rise that was the catalyst for many homeowners and landlords to remortgage but
the second or third increase. The reason
being that it was only by the time of the third rate rise, it started to hit the wallet. However, the issue is, by the time of the
second or third rate rise the best fixed rates, were in all instances, no
longer available as they had been pulled by the banks months before.
But here is the good news for Royal Tunbridge Wells
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. I read
that the well respected UK
financial website Moneyfacts said only a couple of weeks ago, the average two
year fixed rate mortgage has fallen from 3.6% twelve months ago to just under
2.8%.
Interestingly, according to the Council of Mortgage Lenders,
the level of mortgage lending had soared to a seven year high in the UK . So what about Royal Tunbridge Wells? In Royal Tunbridge Wells, if you added up
everyone’s mortgage, it would total £1.9 billion. Even more interesting is when we look at
Royal Tunbridge Wells and split it down into the individual areas of the town,
- TN1 - Royal Tunbridge Wells town centre £279.2m
- TN2 - Pembury £613.3m
- TN3 - Langton Green, Groombridge, Frant, Speldhurst, Lamberhurst £352.3m
- TN4 - Southborough £683.3m
Since 1971, the average interest rate has been 7.93%, making
the current 0.5% very low. So, if
interest rates were to rise by only 2%, according to my research, the 4,636 Royal Tunbridge
Wells homeowners, who have a variable rate mortgage would, combined, have to
pay an approximate additional £21,660,000 a year in mortgage payments. That means every Royal Tunbridge Wells
homeowner with a variable rate mortgage, will on average have to pay an
additional £4,672 a
year or £389 a
month in interest payments.
I know over the last
couple of posts, I have talked about mortgages a lot however, I am not a
mortgage arranger but a letting / estate agent and as regular readers know, I always talk about
what I consider to be the most important issues when it comes to the Royal
Tunbridge Wells Property market and at the moment, in my humble opinion, this
is the most important thing!
Buy to let is all about maximising your investment,
increasing income and reducing costs. I
give advice, opinions, thoughts, concerns, worries, expectations and fears
about the Royal Tunbridge Wells Property market in my blog on the Royal
Tunbridge Wells Property Blog. If you
are interested in the Royal Tunbridge Wells Property Market, you might learn
something by visiting the blog.