Mortgage blog: Just six in ten house purchases in 2013 used a mortgage

Posted 5 March 2014

Over recent months there have been plenty of good news stories about the UK mortgage market. The choice of deals has increased, rates have hit record lows and government initiatives have made a greater range of low deposit deals available.

However, startling new figures from the Intermediary Mortgage Lenders Association (IMLA) show that the percentage of house purchases that required a mortgage was lower in 2013 than in any other year since the global financial crisis.

Mortgages account for just £3.98 of every £10 spent on property in the UK

According to the latest IMLA report, "What is the new normal?" gross mortgage lending in the UK rose from £82bn in 2012 to £94bn in 2013. However, while many lenders have re-entered the market and strong competition is boosting the range of deals, fewer people are actually using a home loan to buy a house.

The percentage of home buyers using a mortgage fell from 76% in 2006 to 65% in 2008 at the onset of the recession. Having recovered to 67% in 2010, it dropped again to a new low of 62% last year.

This means that mortgages contributed less than 40% of the total value of property transactions in 2013 for the first time since current records began. IMLA's analysis means that for every £10 spent on house purchases in 2013, mortgages contributed just £3.98. This is compared to 2010, where mortgages contributed £4.73 for every £10 spent on property.

Keith Osborne, editor of, says: "It is certainly true that the UK's mortgage market grew strongly in 2013 and that access to mortgage finance improved. However, the market still remains subdued and these figures show that property buying favours either people with significant cash or other assets or those people moving home and who have a lot of equity in their property."

Peter Williams, executive director for IMLA, remarks: "It is only recently that responsible borrowers have begun to enjoy a better chance of getting a mortgage. The shift towards cash and equity for property purchases may be less of a concern if you already have your foot in the door. But plenty more people are still shut out, even when their income and financial track record means they can sensibly manage a loan.

"We are a long way from a normal mortgage market and must stay focused on improving access for responsible buyers who cannot hope to conjure up a vast sum of cash or equity."

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