Record Number of Cash Buyers
According to the latest data, almost 40% of the properties sold in the first three months of 2015 were bought by cash purchasers. This figure is a record high and shows that property investment is rising, even though mortgage lending has become tighter over the past year.
The information comes from the Nationwide, which is the second-biggest mortgage lender in the UK. In the first quarter of 2015, 38% of buyers didn't need a mortgage when purchasing a property. Following the recession, cash-buyer rates have been rising, as this area of the market is less affected by unemployment levels and tougher restrictions on lending rates.
Over the past year, the average number of buyers has grown from 36%. However, experts believe that it is unlikely to increase much further, as the mortgage market is now increasing, resulting in more people being accepted for a loan. Data from the Bank of England highlights that mortgage approval rates in April reached their highest level for 14 months.
There are significant differences across the country in the levels of cash purchasers, which highlights the variations that exist in the property market. The highest figure, according to information from the Nationwide, is in the North East, where almost 50% of people paid for their property purchase in cash. This was followed by the South West.
There are a number of reasons for the particularly high levels in these areas of the country. House prices in the North East are considerably lower when compared with other regions, enabling more buyers to pay with cash and increasing the number of buy-to-let investors. In the South West there are a higher number of older buyers, who might be downsizing or have enough equity that they don't need a mortgage.
Making the Most of Your Purchase
If you're thinking about buying your property outright, then there are a number of factors you should consider. One of these is whether or not the property you're buying will require any work doing on it. If you use all of your cash on purchasing the home, there might not be enough left to carry out alterations, such as fitting a wrought iron Juliet balcony. Another option might be to consider taking on a small mortgage, which would still provide you with the spare cash to carry out any necessary work on your home.