Halifax released a report this week claiming homeowners spend an average of £600 on mortgage payments compared to £700 in rent for the same size property, making buying 14% cheaper. The fall in the cost of buying compared to the average rent has been significant.
The reversal follows a massive fall in the average mortgage rate for new borrowers – from 5.82% in March 2008 to 3.59% last month, cutting monthly payments by around 39%.
Two issues that make it a little challenging for first time buyers are the need for a substantial deposit and the ability to get a mortgage approved. These two factors alone have taken away the choice, and dictated the renting option only.
The Halifax claim marks a considerable turnaround from 2008, when buying cost 43 per cent more than renting. A low Bank of England base rate of interest, combined with falling house prices, has driven the cost of mortgages down, making buying a more affordable option.
The average mortgage rate for a new borrower has fallen from 5.82 per cent in March 2008 to 3.59 per cent last month, cutting monthly payments by around 39 per cent.