"As the property market heats up and interest rates fall, the number of househunters using a mortgage to fund their purchase is surging and cash buyers are becoming relatively rarer."
- Stuart Cheetham, CEO of MPowered Mortgages
Cash buyers are securing average discounts of over 13% compared to the prices paid by buyers needing a mortgage, new analysis by MPowered Mortgages reveals.
The study of Land Registry records of sales completed in September 2024 found that across Great Britain, cash buyers paid £28,189 less per property than buyers who relied on a mortgage - a discount of 9.3%.
Comparing the figures with those of September 2022 - when Liz Truss’s mini-Budget slammed the brakes on the property market - the average ‘cash discount’ has grown by 12.4% in two years.
The discounts are considerably higher in several parts of Britain. Cash buyers enjoy the biggest discounts in North West England, where they typically pay £31,827 (13.4%) less than buyers using a mortgage.
In Scotland the average ‘cash discount’ is £26,476 (12.8%), and in North East England it is £22,122 (12.4%).
The discounts available to cash buyers are rising as mortgage applications surge and cash purchasers become scarcer. Bank of England data1 shows that 68,300 mortgages for a house purchase were approved in October 2024, up 41.5% in a year and the highest level since August 2022, the month before the mini-Budget.
Meanwhile HMRC figures show the number of residential property transactions completed last October jumped 10% compared to September, and by 21% compared to October 2023.
The research found the only place where cash buyers don’t enjoy lower prices is London. In September 2024, cash buyers in the capital paid £15,344 more per property than those using a mortgage, a reflection of the high numbers of foreign property investors buying homes there. London’s ‘cash premium’ of 3% has nearly halved since September 2022.
MPowered’s analysis also found that cash buyers now account for barely a fifth of home purchases in Britain. In July 2024, the most recent month for which official data is available, 22.4% of completed transactions were made by cash buyers. By contrast, in September 2022 their share of the market stood at 28.6%.
Stuart Cheetham, CEO of MPowered Mortgages, commented: “Two factors explain the power cash buyers have to pay less for the home they want - scarcity and speed.
“As the property market heats up and interest rates fall, the number of househunters using a mortgage to fund their purchase is surging and cash buyers are becoming relatively rarer.
“Then there’s the trump card that cash buyers can play - speed. Rising demand is making a slow process take even longer, and the average seller in England and Wales now has to wait 152 days between accepting an offer and completing their sale.
“That’s why buyers who have their finance fully in place when making an offer are vastly more proceedable - i.e. attractive to sellers - than those who don’t. Sellers will often accept a lower offer in return for the extra certainty these buyers represent.
“If you’re not fortunate enough to have the money to buy the home you want outright, you can give yourself almost the same leverage by having a fully underwritten mortgage offer.
“AI technology is dramatically shortening the time needed to secure a mortgage, and at MPowered we offer a lending decision within one working day to 96% of the completed mortgage applications we receive. Many customers report that this speed and certainty gives them a decisive advantage during the buying process, and leverage that was until now enjoyed only by cash buyers.”
