New research shows
The role of cash in funding house purchases reached a post-recession high in 2016, according to new analysis by the Intermediary Mortgage Lenders Association (IMLA) which adds to the weight of evidence showing growing social divisions in the UK housing market.
Despite the resurgence of mortgage lending following the credit crunch, IMLA’s analysis shows that cash is increasingly oiling the wheels of the residential property market, with potentially far-reaching implications for access to homeownership and wealth distribution.
IMLA’s figures show the total value of residential house purchases in the UK reached £261bn in 2016, with £152bn provided by mortgage finance and £109bn made up of cash funds including the proceeds of existing property sales.
It means that while 2016 house purchase lending was up five per cent from 2015 and 32 per cent since 2013, the total sum of cash injected into residential property rose significantly faster: 12 per cent year-on-year and 57 per cent over three years. Growth of £6.8bn in house purchase mortgage lending from 2015 to 2016 was overshadowed by the extra £11.8bn in cash contributions.
As a result, cash provided 41.8 per cent of funds for residential house purchases, or £418 in every £1,000. This was up from 37.7 per cent or £377 in 2013: the highest contribution of the post-credit crunch years, reducing the role of mortgages in funding house purchases even though total lending grew each year from 2013 to 2016.