The £2.6 billion mortgage debt of Oxford homeowners

Irrespective of the shenanigans and political goings on in Westminster recently, the housing market (for the time being anyway) shows a striking resilience, fostered by the on-going wide-ranging monetary policy by the Bank of England. With interest rates and unemployment low, UKplc is heading into 2020 in reasonable condition. Additionally, despite the UK’s new homes industry improving its year on year new build figures (building 173,660 new homes this year to date - notably 8% more new homes than at the same time last year), there has been an unequal increase in demand for housing, especially in the most thriving areas of the Country.

With the discussion on whether the younger generation can afford to buy, it is true the average cost of a UK property in the early 1970’s was 3.8 times the average salary yet, nationally, it now stands at 8.4 times. On the face of it that doesn’t look good in anyone’s books – yet that isn’t the full story because it doesn’t reflect inflation and interest rates when it comes to the cost of borrowing money in relation to a mortgage for property.

The current level of mortgage interest rates has not been seen for many generations, meaning there are whole cohorts of the Oxford home-owning population who have no appreciation of the pandemonium that will eat into their household budgets should we ever return to the average historical cost of borrowing (interest rates jumped to 15% in 1992 – which wasn’t that long ago and between 2003 and 2007 they were on average 4.9%).

Now, once first-time buyers have jumped the hurdle of saving enough for a 5% deposit, which is hard with rents and many carrying loans of personal debt (unsecured loans), first-time buyers are currently spending an average one sixth of their salary on their mortgage, meaning mortgage arrears are at historical lows. However, on the other side of the coin repossessions have started to grow, with 6,180 repossession orders made in the last quarter, a 55% jump from 2017, yet nowhere near the 2009 high of 29,145 in the first quarter of 2009.

Therefore, this week’s discussion on the Oxford property market is – where are we with lending (mortgages and unsecured loans) and how is it affecting the Oxford, and national, property market?


One vital measure of the property market (and economy) is the mortgage market. If all the mortgages were added up, they would total £968.1bn; a lot when you consider the UK’s GDP is only £2,190.1bn. Mortgages are important as uncertainty causes building societies and banks to curtail lending (remember what happened in the Credit Crunch) and that seriously affects property prices. Then we have unsecured personal loans; interestingly the average Brit owes £991.42 in unsecured loans, a total of £36.1bn.

Lending is the lifeblood of our economy. Go back to 2007, and the phrase ‘Credit Crunch’ hadn’t been invented, yet now the term has entered our everyday language. In the autumn of 2007 it took a couple months before the crunch began to affect the Oxford property market, but in early 2008, and for the following year and half, Oxford property values dropped each month like a stone.

Mercifully, after a phase of sluggishness, in 2011 the Oxford property market started to recover slowly as certitude returned to the economy as a whole and in 2012 Oxford property values started to rise as the economy sped upwards. Happily, the Bank of England recognised the start of another boom and bust cycle, so in Spring of 2015, new rules for mortgage lending were introduced and for the following few years we have seen a reappearance to more credible and steady medium-term property price growth.

Oxford Property Values are 63.3% higher since the Credit Crunch

And what of the other side of the coin in terms of excess lending in Oxford?

Since 1977, the average Bank of England interest rate has been 6.65%, making the current low rate of 0.75% very low indeed. Yet the issue isn’t the amount of lending, as much as the persons ability to pay. Therefore, whether a person’s mortgage is fixed or not is more important than the amount owed.

Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.5% in the autumn of 2012 to the current 70.2%. If you haven’t fixed your mortgage – maybe you should follow the majority? 

The total cost of mortgages owed by people in Oxford is £2,620,308,244

In my modest opinion, if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), interest rates can only go one way from their current ultra low level of 0.75% ….and that is why I consider it important to highlight this to all the homeowners and landlords of Oxford. Maybe, just maybe, you might want to consider taking some advice from one of the many qualified mortgage advisors in Oxford?

Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697


www.fineandcountry.com

The £673 million mortgage debt of Banbury homeowners

Irrespective of the shenanigans and political goings on in Westminster recently, the housing market (for the time being anyway) shows a striking resilience, fostered by the on-going wide-ranging monetary policy by the Bank of England. With interest rates and unemployment low, UKplc is heading into 2020 in reasonable condition. Additionally, despite the UK’s new homes industry improving its year on year new build figures (building 173,660 new homes this year to date - notably 8% more new homes than at the same time last year), there has been an unequal increase in demand for housing, especially in the most thriving areas of the Country.

With the discussion on whether the younger generation can afford to buy, it is true the average cost of a UK property in the early 1970’s was 3.8 times the average salary yet, nationally, it now stands at 8.4 times. On the face of it that doesn’t look good in anyone’s books – yet that isn’t the full story because it doesn’t reflect inflation and interest rates when it comes to the cost of borrowing money in relation to a mortgage for property.

The current level of mortgage interest rates has not been seen for many generations, meaning there are whole cohorts of the Banbury home-owning population who have no appreciation of the pandemonium that will eat into their household budgets should we ever return to the average historical cost of borrowing (interest rates jumped to 15% in 1992 – which wasn’t that long ago and between 2003 and 2007 they were on average 4.9%).

Now, once first-time buyers have jumped the hurdle of saving enough for a 5% deposit, which is hard with rents and many carrying loans of personal debt (unsecured loans), first-time buyers are currently spending an average one sixth of their salary on their mortgage, meaning mortgage arrears are at historical lows. However, on the other side of the coin repossessions have started to grow, with 6,180 repossession orders made in the last quarter, a 55% jump from 2017, yet nowhere near the 2009 high of 29,145 in the first quarter of 2009.

Therefore, this week’s discussion on the Banbury property market is – where are we with lending (mortgages and unsecured loans) and how is it affecting the Banbury, and national, property market?

One vital measure of the property market (and economy) is the mortgage market. If all the mortgages were added up, they would total £968.1bn; a lot when you consider the UK’s GDP is only £2,190.1bn. Mortgages are important as uncertainty causes building societies and banks to curtail lending (remember what happened in the Credit Crunch) and that seriously affects property prices. Then we have unsecured personal loans; interestingly the average Brit owes £991.42 in unsecured loans, a total of £36.1bn.

Lending is the lifeblood of our economy. Go back to 2007, and the phrase ‘Credit Crunch’ hadn’t been invented, yet now the term has entered our everyday language. In the autumn of 2007 it took a couple months before the crunch began to affect the Banbury property market, but in early 2008, and for the following year and half, Banbury property values dropped each month like a stone.

Mercifully, after a phase of sluggishness, in 2011 the Banbury property market started to recover slowly as certitude returned to the economy as a whole and in 2012 Banbury property values started to rise as the economy sped upwards. Happily, the Bank of England recognised the start of another boom and bust cycle, so in Spring of 2015, new rules for mortgage lending were introduced and for the following few years we have seen a reappearance to more credible and steady medium-term property price growth.

Banbury Property Values are 42% higher since the Credit Crunch

And what of the other side of the coin in terms of excess lending in Banbury?

Since 1977, the average Bank of England interest rate has been 6.65%, making the current low rate of 0.75% very low indeed. Yet the issue isn’t the amount of lending, as much as the persons ability to pay. Therefore, whether a person’s mortgage is fixed or not is more important than the amount owed.

Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.5% in the autumn of 2012 to the current 70.2%. If you haven’t fixed your mortgage – maybe you should follow the majority? 

The total cost of mortgages owed by people in Banbury is £673,645,777

(Based on the OX16 postcode)

In my modest opinion, if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), interest rates can only go one way from their current ultra low level of 0.75% ….and that is why I consider it important to highlight this to all the homeowners and landlords of Banbury. Maybe, just maybe, you might want to consider taking some advice from one of the many qualified mortgage advisors in Banbury?

A useful tip if you’re thinking of holding off selling until the New Year 2019

One of the biggest things in estate agency is people deciding that winter is not the best time to sell. I have been in estate agency for 20 years and in my experience winter is a time where we have the most success. 

Watch this video below and I discuss why winter is the best ime to list your home 👇 


If this was not enough of a reason to sell your home in the winter. Watch my latest market update of the local Banbury market to find out some more reasons why market signals may be pointing to an uptick in activity moving into 2020 👇

If you want to read more and drill further into the stats and figures here is a digital version of the national and regional market report for December

Happy reading 👇 🎅🏻 🧝 🎄


Are the Tory’s Selling Off the Final Part of the Family Silver? 2,680 Banbury Housing Association Households & the Right to Buy Their Homes

In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their own their own council flats and houses, although it might interest you to know, that the council tenant right to buy idea was first proposed in the late 1950s and formed part of the manifesto of the Labour party. Yet Maggie’s version was based on massive discounts for tenants and 100% mortgages (i.e. no deposit). However, the real bugbear was that half the monies raised form the house sales went to central Government and the other half to the local authorities … but that money had to be used to reduce the local authorities debt rather than building new houses - so houses were being sold and not replaced.

4,884 council homes in the Cherwell area have been

bought in the last 40 years (an average 122 per year)

Interestingly, the Tories relaxed the rules in 2012 for right to buy and raised the highest discount on a property to £75,000 (it has subsequently increased further, to £100,000, in some parts of the UK) meaning 62,114 council houses have been sold nationally since the rule change, raising £6.228bn since 2012 alone.


The issue, stated by many existing council house tenants, is that those tenants turned homeowners subsequently sell on their ex-council homes at a huge a huge profit, meaning the demographics of those areas has become ever more transient, more specifically, properties that were once council homes are now owned by buy-to-let landlords who rent them out on a short-term basis.


Yet up to this point in time, nothing has been said about ‘other’ type of social housing - housing association properties. Whilst council houses are properties owned by the local authority providing low cost social housing, housing associations also provide lower-cost social housing for people in need of a home, yet they are private, non-profit making organisations.


The Tory’s state one of the biggest divides in our British society is between those who can and cannot afford their own home, so plan to establish a new national model for shared ownership which allows people in new housing association properties to buy a proportion of their home while paying a lower/subsidised rent on the remain part - helping thousands of lower income earners get a step onto the housing ladder. 


So, what for the tenants of the existing 2,680 housing association households in Banbury? The Conservatives have said they will work with housing associations on a voluntary basis to determine what right to buy offer could be made to those Banbury tenants, although there are already existing rules which give most housing association tenants the right to buy their home, yet with only modest discounts of £9,000 to £16,000 depending on where you live. So, what does all this mean for the current homeowners and landlords of Banbury properties?

The Tory’s sold off 4,100 council houses in Cherwell whilst in power between 1979 and 1997

This really created waves in the housing market in the 1980’s and was a contributary factor to the housing crash of 1987 when Dual-MIRAS tax relief was removed by Nigel Lawson. By the selling off of council housing in those years they were accused of selling off the family silver cheaply, thus created the foundation of the buy-to-let boom of the early to mid 2000’s, because of major shortage of affordable housing being sold in the previous two decades.

Yet this time round, note the Tory’s state it is just for new housing association properties, not existing. Also, that tenants will have the right to go into shared ownership - NOT OUTRIGHT OWNERSHIP. This means this policy will have hardly any effect … unlike the Thatcher policies of 1979. 

Labour Party’s U-turn on the £1.6bn grab on Oxford landlord’s wallets

Well, with the General Election just over the horizon and having been asked by a number of Oxford homeowners and Oxford buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount - just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.

However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Oxford landlords?

Labours policy of 20% Right to Buy discount could

cost Oxford landlords £1,565,729,990

… and if Oxford tenants got the maximum discount of 35% that Council tenants have with the Right to Buy scheme that would cost Oxford landlords £2,740,027,480.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Oxford’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) ……

Of the 15,980 rental properties in Oxford, 4,363 are owned by Oxford landlords with 6 or more properties in their portfolio

To target these larger scale landlords, who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation became law, thus making the tenants homeless (and who would house them??) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£427,489,360 in Oxford alone).


If Labour want to fix the property market, it needs long term certainty and confidence, yet even these revised policies would instantly challenge this

And don’t think I am just Labour bashing here as the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a boon for new home builders.

The Tory’s announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market. That £10bn could have been better spent building Council houses, not helping the large plc builders line their pockets with Government cash.




Tristan Batory | Associate 

Fine & Country Oxford 
267 Banbury Road, Summertown, Oxford, OX2 7HT 


E: tristan.batory@fineandcountry.com
T:   +44 (0) 1865 953243

M:  +44 (0) 7879 407697


www.fineandcountry.com
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