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 Clacton Property market, but in November / December 2007,
and for the following seventeen months, Clacton
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 Clacton
property market started to recover slowly in 2011, 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 Clacton 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 Clacton
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 Clacton? In Clacton,
if you added up everyone’s mortgage, it would total £701 million. Even more interesting is when we look at Clacton and split it down into the individual areas,
- CO15 - Clacton-on-Sea £406.7m
- CO16 - Clacton-on-Sea, St
Osyth, Little Clacton £294.3m
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 3,504 Clacton
homeowners, who have a variable rate mortgage would, combined, have to pay an
approximate additional £7,991,400 a year in mortgage
payments. That means every Clacton homeowner with a variable rate mortgage, will on
average have to pay an additional £2,281 a year or £190 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 Clacton 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 Clacton Property market in my blog on the Clacton Property Blog. If you are interested in the Clacton Property
Market, you might learn something by visiting the blog
www.clactonproperty.blogspot.co.uk.
