UK house prices: The proportion of house buyers shunning mortgages for cash purchases has hit a record high
More people than ever before are buying houses without the need for a mortgage, according to new figures.
Almost four in 10 people (38 per cent) paid for their properties in cash during the first quarter of the year, Nationwide has said. This mitigated subdued mortgage lending data to some extent.
There are signs that mortgage lending is picking up too, so 38 per cent could be the benchmark for some time.
Yesterday, the Bank of England released data showing loans granted for mortgages were at their highest for over a year.
Read more: UK house price growth slows to lowest rate in over a year
Nationwide’s chief economist, Robert Gardner, said:
In the first quarter of 2015 overall housing transactions were down by around five per cent compared with the first quarter in 2014, while mortgage completions were around 11 per cent lower.
Although 38 per cent is a record, it isn’t a massive jump on the previous high-water mark. This is partly because the financial crisis precipitated a fall in the number of people able to afford mortgages.
Though the 38 per cent share was a record, it was only modestly above the average of 36 per cent prevailing in 2014. The significant rise in the share of cash transactions occurred in the wake of the financial crisis, where a tightening in credit conditions and a deterioration in the labour market limited the number of people able to buy with a mortgage (developments which would have had much less of an impact on cash buyers).
Nationwide also released its house price index data today, showing that price growth slowed to an annual 4.6 per cent in May, down from 5.2 per cent in April.