Between February and March cash funded transactions increased as much as mortgage transactions despite only accounting for 35% of the market.
The busy March housing market was driven by people buying with cash proportionally to mortgages, Council of Mortgage Lenders analysis has found.
Between February and March cash funded transactions increased as much as mortgage transactions despite only accounting for 35% of the market.
Property transactions were around 60,000 higher than typically expected in March at 162,000 in the run up to the 3% buy-to-let stamp duty surcharge deadline on 1 April.
The CML’s economist Mohammad Jamei, who authored the analysis piece on the trade body website in its News & Views section, wrote: “A 60,000 increase in property transactions compared to the baseline was larger than expected, and we can now see that this was mainly as a result of a marked increase in cash transactions.
“Cash-funded transactions increased by nearly as much as mortgage transactions, even though cash has on average only accounted for 35% of the market.
“Our current best estimate is that an extra 32,000 mortgaged transactions took place in March, which means there was also a big jump in cash transactions, to the tune of 28,000.”
The CML predicted the market seeing 10,000 fewer mortgage transactions in April, May and June after the March rush.
Jamei added: “Our understanding is that approved applications that were in the pipeline were squeezed to complete before the stamp duty deadline, as opposed to seeing a big increase in new applications being approved in March.
“As a result, it is very likely that we will see lower activity levels in the next few months, which ties in with early data we have collected for April, showing a marked drop-off in lending.”
