Posts with tag: Cash buyers

Rise in the number of cash property purchases

Published On: May 10, 2017 at 3:33 pm

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Categories: Property News

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There was a substantial rise in the number of home-buyers using cash in order to purchase property in the last year.

In fact, according to the Intermediary Mortgage Lenders Association (IMLA), mortgage lending made its smallest contribution to the financing of property acquisitions since well before the recession.

Falls

The overall percentage of mortgage funds used by buyers fell to 58.2% in the last year- substantially lower than the 76% recorded in 2006. In addition, this was lower than the 65% seen at the onset of the recession in 2008.

This means that the percentage of money spent on residential property in 2016 hit a post-recession high of 41.8%-up from 40.1% one year ago.

In total, £109bn of cash was put into purchases of residential property during the last year- a rise of 12% compared to 2015 and 57% greater than in 2013. This figure significantly outpaced the growth of mortgage lending during the respective corresponding periods.

What’s more, IMLA’s figures indicate that the total value of residential property purchases in Britain hit £261bn during 2016. £152bn of this was provided by mortgage finance.

Rise in the number of cash property purchases

Rise in the number of cash property purchases

Supply

Peter Williams, executive director of IMLA, said: ‘The shift towards cash is partly a consequence of trying to manage housing demand by restricting mortgage supply, with Financial Policy Committee (FPC) actions in 2014 quickly layered on top of the Mortgage Market Review (MMR) affordability rules.’[1]

Continuing, Williams said that he believes existing restrictions on mortgage lending are ‘over-zealous.’

‘The recent housing white paper was a missed opportunity to take strong action on housing supply, and we must hope that the upcoming election manifestos will be used as an opportunity to put that right. For all the focus on the UK’s international standing, Brexit mustn’t blind the next government from problems brewing on its own doorstep which will drive an increasingly bigger wedge between different elements of society and block those without family financiers from having access to home ownership,’ he concluded.[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/5/rise-in-cash-buyers-due-to-over-zealous-lending-rules

 

Cash buyers at record high

Published On: June 3, 2015 at 11:14 am

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Categories: Landlord News

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New figures released today have indicated that property cash buyers in the UK are currently at a record high.

According to data from the UK’s second largest mortgage lender the Nationwide, 38% of homes sold in Britain during the first quarter of 2015 were done so without the need for a mortgage.[1]

Investment

The results of the report show that low interest rates are encouraging more investment in property, with tumbling mortgage lending rates also a major contributing factor.

Additional statistics from the Nationwide report shows that British house prices in May were up by 4.6% in comparison to the same period last year. This represented a slowdown from the 5.2% annual rise reported in April. The overall price of a property in May was up 0.3% on last month, meaning that the average price of a home in Britain is now £195,166.[1]

Last year, the proportion of cash buyers purchasing a property was 36%, meaning the 38% recorded in the first months of this year is a record level.[1]

New rules

Despite the record high recorded, the Bank of England suspects that the peak is unlikely to continue, due to an increase in mortgage lending. On Tuesday, data revealed that the total of mortgage approvals for home purchases increased to a 14-month high during April.

Alex Gosling, chief executive of online agents HouseSimple.com, feels that the, ‘proportion will fall throughout the year as lenders and borrowers adjust to, and become more familiar with the new lending rules.’ He went on to say that this, ‘realignment of buyers with lenders may well be evident in the strong mortgage approvals data issued this week by the Bank of England.’[1]

Cash buyers at record high

Cash buyers at record high

Totals

Taking into account the total number of cash buyers as opposed to the proportion, there has been a slight rise since 2008. However, figures have not yet reached the heights of the housing surge in 2007.

The highest proportion of cash purchasers was recorded in the North East in 2013, were almost 50% of transactions were of this type. Second highest was the South West of England. This was due to the fact that the cost of property in the North East was quite low in comparison to the rest of England.

[1] http://www.bbc.co.uk/news/business-32977217