The number of £1m mortgages in the UK has risen by a fifth

NatWest, owned by Royal Bank of Scotland, said it granted 233 mortgages of more than £1 million in 2014, and so far this year has issued another 207

Continuing low interest rates are encouraging more people to switch to interest-only mortgages (Getty Images)

Swelling property prices have had a knock on effect on the mortgage market, prompting the number of £1 million or more mortgages to jump by a fifth.

Figures from Nationwide, obtained by the Guardian, show that 269 customers have taken out mortgages of more than £1m in 2015, compared with 167 this time last year. Meanwhile one in 14 borrowers now have mortgages above £500,000 according to figures obtained by the Guardian .

NatWest, owned by Royal Bank of Scotland, said it granted 233 mortgages of more than £1 million in 2014, and so far this year has issued another 207. It expects to finish 2015 with lending in this bracket up by 18 per cent.

Why would a millionaire need a mortgage anyway?

With interest rates at an historic low, £1 million mortgages have become more affordable for high earners.

They prefer to borrow against their home and use the cash for other luxury assets such as private jets, yachts or investment in hedge funds.

While average earners have been forced to take out repayment mortgages, the wealthy tend to be offered lower-cost interest-only deals, with privately negotiated rates.

What kind of person gets a £1 million mortgage?

The typical applicant is a banker or a footballer, but the market generally splits in two.

One the one hand they are the international elite, relying on private banks, and based in the area of Kensington & Chelsea.

On the other hand, they are domestic British buyers who use high-street banks and buy in South-West London, Surrey and Cheshire.

How much do these people earn?

Halifax said that the average income of customers with a £1 million mortgage is £389,000 a year.

What are the repayment terms like?

For the very wealthy, repayments on a £1 million loan start at about £5,000 per month – equal to three times the monthly take home pay for the average full-time worker.

Ouch, that seems like more than anyone could afford.

Yes, but many average earners are also left with little choice but to maximise their borrowing to afford a home.

In 2008, just 3 per cent of mortgages in the UK were above £500,000 in size but this has since more than double to 7 per cent.

Aren’t there risks?

The biggest risk for super-sized mortgage owners is a change in the interest rate. If the Bank of England base rate rises from 0.5 per cent to 3 per cent, a £1 million loan will cost the borrower upwards of £7,000 a month.