Wealthiest U.K. Home Buyers Get Cheapest Mortgages on Record

(Bloomberg) -- U.K. mortgage lenders are adding more fuel to the surging property market.

The cost of borrowing for a purchaser with a large down payment fell to 1.2% at the end of May, below the inflation rate and the cheapest since the Bank of England began compiling the data in 2012. That’s based on a purchaser with a 40% deposit taking a two-year loan at a fixed rate.

Buyers have rushed to acquire homes outside London as the pandemic leads to a reassessment of priorities. Many have large amounts of equity from their houses, allowing them to take advantage of the best mortgage deals to pay for larger properties with more outside space. A temporary cut in the stamp-duty sales tax has also boosted competition.

Values are now rising at the fastest annual pace in almost seven years, mortgage lender Halifax said Monday. A similar picture emerged in a report from Nationwide Building Society last week.

“The majority of people are looking to move to less urban areas, with this preference particularly pronounced for older age cohorts,” Nationwide’s Chief Economist Robert Gardner said.

©2021 Bloomberg L.P.