Nationwide reveals cash buyers are at a record high
According to the UK’s second-largest mortgage lender Nationwide, property cash buyers are at a record high. Auction House London examines why those buying UK property without a mortgage were at a record high in the first quarter of 2015.
During the first three months of 2015, almost 4 out of every 10 properties were sold without the need for a mortgage, some 38% sold to cash paying buyers, up from 36% of the previous year. Low interest rates have certainly stimulated renewed interest in buying property. There has also been a slowdown of annual house price rises, allowing more people to purchase. Although the figure was 4.6% higher than a year ago, it was down from the 5.2% annual rate increase. The average asking price of a property appears to be hovering around £195,166.
According to Nationwide, last year’s figures confirm that house prices rose 7.2%. Tight credit restrictions and fear of unemployment, plus the levels of wage rises, have not appeared to have the same effect on potential cash buyers, as those who require a mortgage.
New figures from the Bank of England, point to a balancing out due to better mortgage deals, rising to a fourteen month high, since the settling effect of the election results. It is also the first full year of consistent wage growth that has stayed above inflation.
Regional differences
The biggest number of cash buyers, almost half have come from the north of England, whilst London lagged behind. This is not so surprising considering the relative costs and looking at price rise fluctuation between 17.8% in London, right down to 1.4% in Wales.
The Government Help to Buy scheme, which is intended to help people who can afford mortgages but struggle to find a deposit, will also affect the balance.
House sales had been above 100,000 a month in 2014, figures from HM Revenue and Customs (HMRC). You have to go back to 2007 to find similar comparisons. Suggestion that House price growth will be nearer to 3% in the coming year, this should stimulate sales in both mortgage and mortgage free sectors.
Benefits of paying for property with cash
Paying cash for your home does eliminate paying interest on the loan and also several many deal closing costs, there are no mortgage fees, or appraisal fees charged by lenders. Paying with cash will also make your offer more attractive. Most sellers will jump at the chance as there are fewer problems with refusal of loans.
However, there are tax implications for the buyer and no interest to be gained on your money once you have spent it. At present those that can afford it, seem to favour paying cash.
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