Rent or buy? First-time buyers in London save £1,000 a year compared to renting as mortgage rates remain low
Londoners managing to jump on the property ladder are saving £984 a year by making mortgage repayments instead of paying rent as a result of low rates and rising rental prices.
New home owners in the capital are pocketing more money than any other region along with first-time buyers in the West Midlands, saving £984 a year on average, or £82 a month according to Halifax.
Low mortgage rates since 2009 have resulted in monthly mortgage payments declining by eight per cent from £734 to £677, a drop of £57.
While the cost of buying has gone up by £25 in the last year it has been offset by the rise in rental costs of £42.
Across the country first-time buyers are saving £1,320 by making monthly mortgage payments compared to renting, or £110 a month. The monthly mortgage payment on a three-bedroom house is £677 on average, compared to a rental price of £787.
It’s the biggest difference in cost between buying and renting since 2009, when buying a house cost £37 more than renting.
The cost effectiveness of home owning over renting has helped double the number of first-time buyers in the last five years, and drive a 29 per cent rise in the last year.
Halifax mortgage director Craig McKinlay said:
“The improvement is due to a combination of lower mortgage rates and rising private rents. In contrast, market conditions for renters have deteriorated as rents have risen over the same period. Buying costs have been remarkably stable for much of the past five years making homeownership a more attractive option.
“With greater availability of mortgages that require smaller deposits, the property ladder has also become even more accessible for those who can afford the monthly costs of owning but had previously not been able to save the necessary deposit.”