The Government's Annual Housing Survey is 50 years old this year. It has taken a snap shot of the UK's property market every year since 1969 and in the recently published report for 2018, it wasn't a surprise that owner occupation is still the most predominant tenure, yet now more people own their home without a mortgage rather than having a mortgage as the number people buying their first home (obviously with a mortgage) has declined since the Millennium. The report also shows homeowners (mortgaged and owned outright) are, on average, older than renters and between the homeowners themselves, those who are mortgage free are older than those with a mortgage. On top of that, there are those who bought their property with cash and therefore didn't need to worry about mortgages or the interest rates. However, before you buy a property with cash, you should know that interest is not the only consideration you should be making.
Looking at the most recent of data for Darlington, I wanted to see how we compared to the national picture. Therefore, focusing on the main 4 tenures of owned outright, owned with a mortgage, social housing (i.e. Council Housing and Housing Association) and private rented, this is what I found out…
|Darlington – Tenure by Age|
|Age||Owned Outright||Owned with Mortgage||Social Housing||Private Rented|
|Age 24 & Under||1.5%||11.2%||21.2%||66.1%|
|Age 25 to 34||2.7%||41.3%||13.9%||42.1%|
|Age 35 to 49||8.4%||58.1%||12.3%||21.1%|
|Age 50 to 64||36.0%||39.4%||13.6%||11.0%|
|Age 65 to 74||64.2%||10.6%||18.4%||6.8%|
|Age 75 +||65.2%||5.9%||23.1%||5.8%|
Looking at the stats, you can see that homeownership in Darlington and council area as a whole (both owned and owned with a mortgage combined) is lower in the 25yo to 34yo age range compared to 35yo to 49yo, yet roll the clock back to the 1980s and opposite was the case.
So how many local homeowners have paid off their mortgage?
45.3% of Darlington homeowners are mortgage free, yet of the 9,456 households that are owned by 50yo to 64yo in Darlington, 52.3% of those people still have a mortgage.
As most people bought their first house in their early to mid 20's back in the 1980's, this shows that a lot of Darlington people must have re-mortgaged in the past and extended their borrowings (otherwise they should have paid their mortgage off now).
The other thing that concerns me is the 5.9% of the Darlington over 75yo homeowners that have a mortgage.
If you amalgamate the national historic ranges going back to 1977 (see the graph below “UK Households with a Mortgage by Age – 1977 to 2018” and note the age bands are slightly different to the recent local stats because they were carried out under different government departments), you will see the number of people who own a property with a mortgage has been dropping since the Millennium, yet nationally the number of people who own a property has remained roughly the same, even with the growth of the private rented sector.
Reports in the industry suggest that in the next ten years that will increase, as nearly 1 in 5 homeowners will be still paying off their mortgage after retirement which throws a serious spanner in the works. If they're still needing to pay off their mortgage, it makes it harder to afford other things as they aren't bringing in an income. Those with issues like this often go to a financial advisor like joslin Rhodes in Durham to ensure they are financially sound throughout retirement, even if they are still paying off a mortgage. One of the reasons behind that will be the legacy of interest-only loans and delayed first-time buying as we become more and more like Germany in our house ownership models, where people naturally rent their homes until their 50's and then buy when they inherit money from their parents.
In the meantime, demand for Darlington rental properties will only increase … so good news for Darlington Buy to Let landlords and indirectly Darlington homeowners as well.