Lewisham Starter Homes are 32.9% Cheaper Today Tha

Lewisham Starter Homes are 32.9% Cheaper Today Than in 1989

Even though the average value of a Lewisham first-time buyer property has risen by 453.9% since 1989 to £394,450, the monthly payments Lewisham first-time buyers must make on their mortgages as a proportion of their take-home pay is 32.9% less today compared to 1989.Today, according to the Nationwide Building Society …

Even though the average value of a Lewisham first-time buyer property has risen by 453.9% since 1989 to £394,450, the monthly payments Lewisham first-time buyers must make on their mortgages as a proportion of their take-home pay is 32.9% less today compared to 1989.
Today, according to the Nationwide Building Society …




the average Lewisham first-time buyer only needs to pay out 53.2% of their household take-home pay on their mortgage payments, compared to 79.2% in 1989 (i.e. a third less).




You might say 1989 was 33 years ago, a long time ago and not relevant to today. I would agree.


So next, I looked a little closer to home, and in 2007 …


the average Lewisham first-time buyer had to spend 61.9% of their household income on mortgage payments
(i.e. 14.1% proportionally cheaper than today).






So why do I say all these things?


Last month, the Bank of England revealed that its Financial Policy Committee would be removing their mortgage market affordability test on people taking out mortgages in August.


The test was introduced in 2014 to ensure the UK didn’t have a repeat of the 2008 Credit Crunch and particularly hit first-time buyers with what they could afford to buy.




This rule change means Lewisham property buyers could soon be able to borrow thousands of pounds more and purchase larger homes.




The decision to withdraw the affordability test certainly raised eyebrows in the press, primarily as the Bank of England has raised interest rates five times in the last six months to try and reduce rising inflation. Yet, as stated in the first part of this article, Lewisham first-time buyers are comfortably paying their mortgages compared to previous years therefore - everything should be ok with this rule change.


The old rules tested home buyers on mortgage repayments if interest rates rose to 6%/7%, yet the Bank thought that rule was too harsh.
Not all rules have been changed, as the important Bank of England ‘loan to income ratio’ stays put.


The Bank were keen to stress that the mortgage market was not going to turn into a free-for-all as it did in the mid-2000s when the likes of Northern Rock were offering 125% mortgages, and a sixth of all UK mortgages were given without proof of income.


I believe it will have a progressive effect on the Lewisham property market.




Many Lewisham tenants who have been paying rents far more than actual mortgage payments for the same Lewisham home, but have failed affordability assessments regardless, will now be able to get on the property ladder.




The rule change should open the Lewisham property market up a little more and allow house prices to grow in Lewisham.


I advise anyone who has been refused a mortgage on affordability in the past to speak to a mortgage arranger. If you don't know of one, drop a message to me, and I will give you details of mortgage arrangers you could talk to.


Written By Neil Raja




Neil Raja ANAEA, MARLA
Director
M 07930501099
P 02088524441
E neil.raja@remax.co.uk
Remax First
250 Lewisham High Street, London, Se13 6Ju
www.remax-first.lifesycle.co.uk/blogs


𝗖𝗹𝗶𝗰𝗸 𝗜𝗺𝗮𝗴𝗲 𝘁𝗼 𝗠𝗲𝘀𝘀𝗮𝗴𝗲 𝗠𝗲 𝗗𝗶𝗿𝗲𝗰𝘁𝗹𝘆


Popular posts like this