The Mortgage Market is Back

For the past two years, the housing market has been living through an unusual phase. With borrowing costs rising sharply and mortgage affordability stretched, cash buyers stepped into the breach and accounted for a far greater share of transactions than normal. That period now appears to be over. The data shows that the mortgage market is firmly back.

In 2025, cash buyers accounted for 28% of the overall market, meaning mortgaged buyers made up the remaining 72%. That split is significant. It brings the market back into line with the proportions seen in 2021 and 2022, before the sharp escalation in interest rates disrupted normal patterns of demand. In other words, the balance between mortgaged and cash purchasers has normalised.

To understand why this matters, it is worth revisiting what happened in 2023. As interest rates surged in response to persistent inflation, mortgage costs rose rapidly. Affordability was squeezed and many buyers who relied on borrowing either paused their plans or found their purchasing power reduced. In that environment, cash became king. In 2023, 34% of sales across England and Wales were completed without a mortgage. That compares with a 28% average over the previous five years. The market had become unusually dependent on buyers who were insulated from borrowing costs.

Such a high concentration of cash transactions is not, in itself, a sign of strength. On the contrary, it often indicates restricted access to finance for mainstream households. A healthy housing market relies on a broad mix of participants: first-time buyers using high loan-to-value mortgages, home movers trading up or down with the help of equity and borrowing, investors, and cash-rich purchasers. When one group dominates because others are effectively sidelined, activity becomes narrower and more fragile.

The turning point came in 2024. As mortgage interest rates began to ease and lenders competed more actively for business, affordability improved. Buyers who had been waiting on the sidelines started to re-enter the market. The data reflects this shift clearly. The share of cash sales slipped to 31% in 2024. While still elevated compared with the longer-term average, it marked the beginning of a rebalancing towards mortgaged transactions.

By 2025, that reversal was complete. Further falls in interest rates and continued improvements in affordability restored confidence among mortgaged buyers. Cash purchases accounted for 28% of transactions, precisely in line with the five-year average seen prior to 2023. Mortgaged sales returned to 72% of the market. The system has reset to something far closer to its traditional structure.

This shift is more than a statistical footnote. It signals that market conditions have moved back towards a more usual status quo. During the period of peak interest rates, the housing market was operating under strain. Transactions were supported disproportionately by those with substantial liquidity. Now, a broader mix of buyers has returned. That diversity underpins stability. It supports chains, improves liquidity and helps ensure that pricing reflects a wider range of demand rather than a narrow, cash-driven segment.

The return of the mortgage-backed majority also has implications for pricing dynamics. When borrowing is more accessible and affordable, demand is less constrained. While lending standards remain sensible and stress testing continues, the improvement in rates has expanded what buyers can reasonably afford. This does not point to runaway price growth; rather, it supports the modest, sustainable increases anticipated over the coming year.

Looking ahead to 2026, further expected falls in interest rates and continued gains in affordability should provide additional underpinning to the market. Provided the wider economic backdrop remains stable, the conditions are in place for steady activity and measured price growth. The extremes of 2023 appear to be behind us.

The conclusion is straightforward. The data from Dataloft by PriceHubble, drawing on Land Registry HPI figures, confirms that the mortgage market has reasserted itself. After a period in which cash buyers carried a disproportionate share of transactions, borrowing-backed purchasers are once again the backbone of the housing market. That is not dramatic, but it is important. A normal market, with a normal balance of buyers, is usually the healthiest kind.