The credit crunch started to hit the Melton Mowbray Property market, in November / December 2007, and for the following seventeen months, Melton Mowbray 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 Melton Mowbray property market started to recover slowly in 2012, 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.
Here is the good news for Melton Mowbray 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 Melton Mowbray? In Melton Mowbray, if you added up everyone’s mortgage, it would total £563.2 million. Even more interesting is when we look at Melton Mowbray and split it down into the individual areas of the town,
• LE13 - Melton Mowbray centre £279.3m
• LE14 - Brooksby, Harby, Hickling, Hoby, Ragdale, Rotherby, Scalford, Somerby, Stonesby, Waltham on the Wolds, Wymondham £283.8m
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 2,422 Melton Mowbray homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £6,418,200 a year in mortgage payments.
That means every Melton Mowbray homeowner with a variable rate mortgage, will on average have to pay an additional £2,650 a year or £221 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 agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Melton Mowbray 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. Please pop into see me in our office on Burton Street or give me a call on 01664 569700.