House prices are set to rise in the coming months and much of that reason is due to continued low interest rates from mortgage lenders. There are many homes in the UK that are being bought without the need for a mortgage loan. According to Nationwide, four out of ten homes were sold for cash in the first quarter of the year.

Nationwide reported that 38% of properties were sold with cash transactions. Last year during the first quarter, cash buyers made up 36% of purchasers. The latest percentage marks a new high. The building society is the second largest mortgage lender in the UK.

House prices were recorded in May as 0.3% up from April. The average house price reported by Nationwide is now £195,166.

The percentage of cash purchases is not expected to increase as there are forecasts of growing demand for mortgage lending. New government programmes will offer first time buyers and home movers assistance with deposits and there are warnings that the cheapest interest rates being offered with mortgage and remortgage deals could soon be pulled by lenders. The need to gain approval soon for the best interest rates will combine with growing consumer confidence to bring more buyers to the housing market.

As the summer season comes closer, it is expected that the usual increase in seasonal purchases will also contribute to more mortgage lending.

However, demand from first time buyers could be hampered by the rising house prices as they find it more difficult to shop for adequate home choices in their budget. It is the fear of many experts that hopeful buyers will find it a difficult road ahead to make a purchase with both tightened lending in place as well as rising house prices.