A growing proportion of housebuyers are purchasing using cash and not a mortgage, analysis from the Intermediary Mortgage Lenders Association has found.
Cash buyers sank £109bn into property in 2016, a 12% increase from 2015 and a 57% rise from 2013 – outstripping growth in mortgage lending over the same period.
In 2013 37.7% of residential purchases were using cash but by 2016 this rose to 41.8%.
IMLA warned that the growing role of cash in the post-recession housing market threatens to deepen social and generational divides and questioned whether tighter rules on lending have become overzealous.
Peter Williams, executive director of IMLA, said: “The shift towards cash is partly a consequence of trying to manage housing demand by restricting mortgage supply, with Financial Policy Committee actions in 2014 quickly layered on top of the Mortgage Market Review affordability rules.
”With the market having cooled and interest rate expectations shifted since then, there is a legitimate case for asking whether current restrictions on lending are still appropriate or have become over-zealous.
“In the meantime, rising house prices and stagnant incomes mean that access to wealth as well as mortgage finance will increasingly separate the ‘haves’ from the ‘have nots’ in the property market if the importance of cash continues to grow.”
He added: “For all the focus on the UK’s international standing, Brexit mustn’t blind the next government from problems brewing on its own doorstep which will drive an increasingly bigger wedge between different elements of society and block those without family financiers from having access to home ownership.”