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 Fitzrovia Property market, but in November / December
2007, and for the following seventeen months, Fitzrovia 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 Fitzrovia 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
Fitzrovia 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 Fitzrovia 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 Fitzrovia? In Fitzrovia, if you added up everyone’s
mortgage, it would total £99.4 million.
Even more interesting is when we look at Fitzrovia and
split it down into the individual areas,
- W1T 1 - £15.2m,
- W1T 2 - £10.7m,
- W1T 3 - £20.3m,
- W1T 4 - £16.5m,
- W1T5 - £12m,
- W1T6 - £14.5m
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 839 Fitzrovia homeowners, who have a variable rate mortgage
would, combined, have to pay an approximate additional £1,128,600 a
year in mortgage payments. That means
every Fitzrovia homeowner with a variable rate mortgage, will
on average have to pay an additional £1,345 a year
or £112 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 Fitzrovia 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 Fitzrovia Property market in my blog on the Fitzrovia Property Blog.
If you are interested in the Fitzrovia Property Market, you might learn something by
visiting the blog. http://fitzroviapropertynews.com
MORTGAGE CALCULATOR PLEASE CLICK LINK Mortgage calculator