Rise of the mega-mortgage: £1 million-plus home loans at highest level on record as families seek more space
The number of new £1 million-plus mortgages is at its highest since records began as buyers secure vast loans for “once in a lifetime” homes.
Latest figures show that 820 seven-figure mortgages were approved in the three months to September, raising a total of £1.37 billion. They averaged £1.6 million each.
The number of such mortgages was up 47 per cent on the previous quarter when 559 were approved for a total of £927 million, according to data from the Financial Conduct Authority.
It was the highest number of seven-figure loans in any quarter since the watchdog started keeping record in the first quarter of 2014, when only 363 were taken out.
Even at today’s low interest rates the monthly repayment on a £1 million mortgage is more than £4,700 with a typical three per cent fixed rate.
A buyer borrowing £1.6 million on a typical fixed-rate deal, with a 40 per cent deposit, would pay £6,700 a month.
An income of at least £220,000 would also be needed to borrow £1 million as 4.5 times earnings is the maximum generally allowed by lenders.
Lucian Cook, residential research director at Savills, said one factor fuelling the £1 million-plus trend could be Londoners seeking large commuter-belt homes near good schools.
Mr Cook said: “Despite taking on over £1 million of mortgage debt, families want more space for their money. If you’ve got a loan that size, you want a house that will meet your needs over a prolonged period.
Ray Boulger, of mortgage brokers John Charcol, added: “The money is there for the right borrower. There is a lot of competition in the market and even some of the smaller lenders will offer mortgages over £1 million.
“I’m surprised by the figures bearing in mind the number of transactions generally has fallen this year and the top end of the London market has been soft for some time.
“A jump of nearly 50 per cent in £1 million-plus mortgages suggests something specific has happened. July and August are traditionally quiet in the housing market.”
Who's taking out £1 million mortgages?
Phil and Zareena Brown took out a £1.3 million mortgage to buy their £1.65 million five-bed home in Rickmansworth in January — and have not looked back.
They wanted more floor space, excellent schools and an investment.
They arranged their loan through Enness Global Mortgages, specialists in high-value mortgages in the UK and Europe.