Nearly four out of 10 homes were sold without the need for a mortgage in the first quarter of the year – a record high, the Nationwide has said.
The building society – the UK’s second biggest mortgage lender – said that 38% of properties were sold to cash buyers.
It said that low interest rates had encouraged investment in bricks and mortar, while mortgage lending had been squeezed in recent years by the banks.
It also said that UK house prices in May were 4.6% higher than a year ago.
This was a slowdown from the 5.2% annual rate of increase recorded in April.
Nationwide said this marked a resumption of a “gradual downward trend” in annual price growth which had begun last summer.
However, prices in May were up 0.3% compared with April, taking the average price of a property to £195,166.
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The proportion of cash transactions – without the need for a mortgage – leapt in the immediate aftermath of the financial crisis, based on Nationwide’s own data.
Tighter credit conditions and unemployment drove the increase at this time, according to Robert Gardner, chief economist at the Nationwide. These elements would not have had the same effect on cash transactions.
Last year, the average proportion of cash buyers was 36%, which then moved up to the new record level of 38% in the first quarter of this year.
Figures published by the Bank of England suggests that the peak is unlikely to be extended, owing to a pick-up in mortgage lending. The number of mortgage approvals for house purchases rose to a 14-month high in April, Bank data showed on Tuesday.
“I suspect [the proportion] will fall throughout the year as lenders and borrowers adjust to, and become more familiar with, the new lending rules,” said Alex Gosling, chief executive of online estate agents HouseSimple.com.
“This realignment of buyers with lenders may well be evident in the strong mortgage approvals data issued this week by the Bank of England.”
Cash transactions have risen slightly when mortgage lending has been squeezed