Half of all property transactions this year could be made without a mortgage.
Lloyds Bank has found that just 155,000 households moved home using a mortgage in the first half of this year. This is 9% fewer than the 171,700 in the first six months of last year.
The latest number of mortgaged home movers – those moving from one owned property to another – is under half the 327,600 recorded at the market peak in the first half of 2007. However, it is around a
Half of All Home Sales Could be Without a Mortgage
third higher than in the worst part of the recession in 2009.
The figure for mortgaged first time buyers has also dropped, at 135,000 in the first six months of the year, down 10% on the same period of 2014. First time buyer numbers peaked at 190,000 in 2006.
If Lloyds Banks’ data is accurate, just 290,000 home moves using a mortgage were made in total in the first half of this year.
If this figure is the same in the second half, there would be less than 600,000 mortgages granted overall for home purchase this year.
The Council of Mortgage Lenders (CML) expects just over 1.2m transactions this year. This means that around half of all buyers would not need a mortgage to move.
Andrew Mason, Lloyds Mortgages Director, states: “While the number of home movers has risen significantly since 2009, it remains well below previous levels and has recovered less strongly than first time buyer numbers.
“This is likely to partly reflect the high costs associated with moving home, as well as highlighting the difficulties that homeowners can face in finding somewhere suitable to move to due to the shortage of properties available for sale.”1
Separate data from Land Registry reveals that sales of homes costing over £1.5m totalled 2,026 in the first six months of the year, down from 3,044 in the same period last year.
This is partly due to December 2014’s Stamp Duty reform, which saw buyers of more expensive properties paying more.
Additionally, Experian has found that moving from a starter home to a family property is becoming more difficult. In 265 out of 276 UK towns, the price of the average three or four-bedroom house costs the average price of a starter home plus half again.
The gap is widest in Scotland and the South East. In Farnham, Surrey and High Wycombe a one or two-bedroom home costs about £225,000 and a three or four-bed house costs around double.