Cash buyers increase as rates rise

The phrase “Cash is King” is likely to ring true as mortgage rates spiral. Here we look at who these new cash buyers are, and why they’re on the up.

Published under Cash buyers and Research — Oct 2022
Cash buyers increase as rates rise

Last month on the 23rd of September the former prime minister and former chancellor presented their “mini-budget”. This announcement had an immediate effect on the economy, shaking the market’s confidence. 

Rates on government borrowing (known as gilt’s) surged as investors questioned the government’s (lack of) plans to pay back debt. These gilt yields impact how much lenders must pay to borrow money to fund people’s mortgages and so they saw their costs rise too. Lenders reacted by pulling mortgage deals from the market, only to return a few days later with mortgages priced at much higher rates. 

However, there are a certain group of buyers who remain unphased by this higher-interest rate environment - the cash buyer. Often these people are downsizers who have paid off their mortgage or wealthy city elites. With mortgaged buyers on the backfoot due to higher interest rates, cash buyers have increased their position considerably.

To illustrate this, we’ve looked at how the proportion of cash buyer registrations changed in the two weeks after the mini-budget.

Overall, cash buyers have made up a much larger proportion of all new applicants registering to buy. In 2021, when rates were at record lows, cash buyers accounted for less than a third (28.0%) of new applicants. As rates have gradually risen this year, that figure rose to 36.8% in the two weeks leading up to the Budget. Since then, they’ve picked up more pace, rising to 37.1%.

The largest shift towards cash has come from those looking to buy a second home. The proportion of cash second homeowner applicants rose from 73.5% in 2021 to 78.4% in the two weeks after the mini-budget. However, this group only account for a small number (1.9%) of all applicants registered to buy.


Movers, who make up the majority of buyer registrations, are also more likely to be buying mortgage-free. The proportion of cash mover applicants increased from 53.9% in 2021 to 58.6% following the budget. As energy costs have risen, we’ve seen an increase in the number of downsizers looking to cash in and move on from their larger homes to something a little more economical.

Meanwhile, an increasing number of investors who are looking to purchase buy-to-lets are having to pay cash in order to make the sums stack up. In some areas, now that rates have risen, purchasing with a mortgage simply isn’t an option for buy-to-let investors because many properties will fail to earn enough rent to pass stress testing. However, investors buying in cash do not have the same problem, which is why the share of investors looking to buy outright has increased from 45.7% to 48.5% over the last year.

If interest rates stay at elevated levels, cash buyers are likely to play an increasingly important role in the housing market going forward. Although, it’s highly likely that some of these prospective cash buyers will be reliant on a mortgaged buyer purchasing their existing house, before making their onward move.

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David Fell

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