The somewhat hostile landscape of the property market in the UK may be treacherous for first time buyers, but it would seem that the wealthier members of society are cashing in on cheap mortgages rates to buy homes costing into the millions of pounds.
Many people cannot afford to buy their own home and become a homeowner. In a lot of cases, it is the deposits that are standing in the way of people’s true independence, or, in other cases, it is the tightened restrictions that the Financial Conduct Authorities have enforced to ensure that people are not borrowing beyond their means which are preventing them from getting a mortgage.
House prices are up, but, in general, interest rates are still low. So while at the lower end of the economic spectrum are struggling to access those great rates, the people at the top are benefitting.
Figures collected by the Guardian have shown the rise in the number of mortgages being lent out for over £1 million. Over the last year, million pound mortgages have jumped by around a fifth, while one in fourteen mortgages are over £500,000.
Taking out a mortgage, in the case of the super-rich, can seem a bit redundant as they can, in theory, simply afford the priciest of homes. However, taking out a low interest mortgage, or even a repayment mortgage, can free up a lot of cash for them to spend elsewhere.
Traditionally, when dealing with amounts of money this large, borrowers would go to private banks, the likes of which you wouldn’t see on the high street. However, with the low interest rates, this seems to be changing. Nationwide is apparently lending 269 mortgages that are over £1 million, compared to the same time last year when it was lending out just 167. NatWest has also apparently granted 233 mortgages over this bracket in 2014, and has issued another 207.
Of course, this business is helping to give the banks an income, which in turn should help them to lend out. However, these figures are still a kick in the teeth for wannabe first time buyers who can’t get enough cash together to make up a deposit, and to whom home ownership is seemingly forever going to be out of reach.