The number of cash buyers has fallen to a record low.
In the first half of this year, the proportion of homes bought without a mortgage fell to 28%.
It is the lowest level since 2007, Hamptons International reported this morning.
There was a peak of 36% cash buyers in 2009, says the business.
According to Land Registry data, the average home bought with cash in the first six months of this year cost £217,810.
Most cash purchasers (68%) were owner-occupiers, while investors accounted for 24%, and second home owners for 5% of cash buyers.
Hamptons said that the fall in cash purchases reflects tighter affordability, and a decrease in the number of downsizers – the group of people most likely to have built up enough equity to buy a home with cash.
Affordability tightening or money so cheap it appears better to borrow?
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I’d put my money on it being more that money is so cheap to borrow it makes no sense to tie up all your cash in one purchase – if you can take out a small £30k, £50k mortgage for pennies interest why wouldn’t you?
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Exactly! Sub 2% interest rates fixed for five years, why put the capital at risk in a slightly uncertain housing market? Borrowing is better for almost all cash buyers now!
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I’d also say that It’s easier to validate a source of funds in the case of a mortgage. With the fear of sounding awkward , when it’s a cash buyer sometimes it’s easier to say to the buyer – can you please get a mortgage rather than provide all the in’s and outs of where you got your funds…
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