Ashford Homeowners’ £2.18bn Debt

Mortgage debt in Ashford Property Market after the Credit Crunch


Over the last 12 months, the UK has decided to leave the EU and have a General Election with a result that didn’t quite go to plan for Mrs May. To add insult to injury, our American cousins elected Donald Trump as the 45th President of the United States. It could be said all this should have caused some unnecessary unpredictability into the UK property market.

Market Resilience

The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the more thriving areas of the Country. Repossessions too are at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. Together, these factors have resulted in…

Ashford Property values, according to the Land Registry, being 8.81% higher than a year ago

So, what does all this mean for the homeowners and landlords of Ashford, especially in relation to property prices moving forward?

Mortgage Market

One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and is representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.

The Credit Crunch

Roll the clock back to 2007 – nobody had heard of the term ‘credit crunch’, but now the expression has entered everyday language. It took a few months throughout the autumn of 2007, before the crunch started to hit the Ashford property market, but by late 2007, and for the following year and half, Ashford property values dropped each month like the notorious lead balloon…

The credit crunch caused Ashford property values to drop by 18.11%

Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (the sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy the Bank of England made six successive interest rates drops between October 2008 and March 2009; resulting in interest rates falling from 5% to just 0.5% – since further halved to 0.25%!

Property Market Recovery

Thankfully, after a period of stagnation, the Ashford property market started a slow recovery in 2011 as stability returned to the economy as a whole and Ashford property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Ashford from the post Credit Crunch 2009 dip and are now 53.97% higher than they were in 2009.

Ashford Property Values during Credit Crunch

Competition Amongst Lenders

Now, as we enter the summer of 2017, with the Conservatives re-elected on a slender majority, the Ashford property market has recouped its composure and in fact, there has been aggressive competition among mortgage lenders, which has beaten mortgage rates down to record lows. This is good news for Ashford 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. For example, last month, HSBC launched a 1.69% five-year fixed mortgage!

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending has soared to an all-time high in the UK:

In the Ashford postcodes TN23 to TN27, if you added up everyone’s mortgage, it would total £2,185,062,397!

Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t yet fixed your mortgage – maybe you should follow the majority?

Rate Increases Likely

In my modest opinion, especially if things do get a little rocky and uncertainty creeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level … and that is why I consider it important to highlight this to all the homeowners and landlords of Ashford. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Ashford…

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