Cash Buyers at Record High
According to Nationwide nearly four out of ten houses were sold without a mortgage in the first quarter of this year. It is believed that there is something of a record high of those looking to sell houses for cash.
Nationwide, the country’s second-biggest mortgage provider, have claimed that 38% of properties were sold to cash buyers in the first quarter.
Nationwide believe that the continuation of low-interest rates has encouraged people to invest in property, while mortgage has been squeezed recently.
UK house prices increased by 4.6% year-on-year in May, slightly less than the 5.3% rise clocked in the prior month, according to Nationwide.
Nationwide said that this signified the continuation of a “gradual downward trend” in annual price growth which started last summer. However, house prices in May increased by 0.3% compared to April, increasing the average property price to £195,166.
The amount of cash transactions, meaning that there is no need for a mortgage, increased in the immediate aftermath of the 2008 recession.
It is believed that tighter credit conditions and an increase in unemployment drove the increase at the time, according to Robert Gardner, chief economist at Nationwide. These components did not prove to have the same effect on those seeking a quick house sale.
The average proportion of cash buyers was 36% last year, which increased to the new record level of 38% in the first quarter of this year.
This figure is unlikely to be extended though, according to findings published by the Bank of England, which suggest that the increase is unlikely to be continued due an increase in those taking out mortgages. According to Bank data, the number of mortgage approvals for house purchases rose to a 14-month high in April.