It is 2017 which means that it’s 50 years since Sweden switched from driving on the left-hand side to the right-hand side of the road and the Beatles released one of my favourite albums.

Yes, this year is the 50th anniversary of Sgt Pepper’s Lonely Hearts Club Band. Back in 1967 the average value of a Rotherham property was £1,840 and the UK’s interest rates were at 5.5%!

What can the Beatles tell us about the property market here in Rotherham…?!

Quite a lot actually… so with my music turned up loud let me explain!

The Current Attitudes of Rotherham First Time Buyers

I have been doing some research on the current attitude of Rotherham 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 (which is good news for landlords). If they buy, demand for Rotherham property goes up for starter homes and that enables other 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.

With that in mind, let us see what is happening to them…

The average value of a Rotherham property is currently standing at £138,728 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.

Things aren’t “Getting Better”! 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 – unfortunately, the only way for many people to get on the housing ladder is “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-60s – perhaps the most apt Beatles song for these first-time-buyers is “When I’m Sixty-Four”!

So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970s. After all life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!

Over the last ten years, Rotherham 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.

What if the housing price bubble bursts?

However, some are arguing that if mortgage companies lend over the long term, they threaten leaving some first-time buyers with a generation of debt stuck “Fixing a Hole” if the house price bubble bursts.

It’s not all bad news thankfully.

Interestingly, when I looked at what had happened to average property values in Rotherham over the last 50 years, there have been bubbles that have burst. Fortunately, first-time buyers can take heart because the UK has always recovered from it within a few years.

175-Rotherham-avg-property-prices-1967

“She’s Leaving Home” may still be the song that our first-time-buyers get to sing.

What if interest rates rise?

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 Rotherham first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should be just fine!

175-historical-uk-interest-rates

“I get the Beatles references, but what does this have to do with Sweden?”

Before I go, a final thought for property buyers in Sweden.

As Swedish property prices are so high, Swedish regulators announced last year limits on the length of Swedish mortgage terms. They don’t bother with 50-year mortgages.

No, our Volvo-loving Swedish friend’s average mortgage length is 140 years – this is not a typo, they really do go “On and On and On”! The new limits from regulators reduced the maximum term of a Swedish mortgage to 105 years – a significant decrease for the Swedes but still a massive mortgage length. You could say that that’s a lot of “Money, Money, Money” to pay back!

My apologies to all the Beatles and Abba fans in Rotherham – a bit of light hearted fun albeit on serious topic.

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