But, what on earth has that to do with the Stamford property market today? Quite a lot actually, so with the volume turned up - let me explain.
I have been doing some research on the current attitude of Stamford 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 Stamford property goes up for starter homes and that enables other Stamford 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.
The average value of a Stamford property is currently standing at £316,501 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 (The Beatles, “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 10 years, Stamford 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 commentators 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 Stamford 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 Stamford first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should be just fine!
My apologies to all Beatles fans - a bit of light hearted fun, albeit on serious topic.
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