Renting cheaper than mortgages for first time in 13 years

Renting cheaper than mortgages for first time in 13 years


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Zoopla’s research team says the rise in mortgage interest rates means it’s now cheaper to rent than to buy for the first time since 2010, according to Zoopla.

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The portal says the average UK rent is £1,163 per month while average mortgage repayments are £1,285 for first-time buyers on a typical 15 per cent deposit.

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On average, monthly rent is £122 cheaper than a monthly mortgage repayment.

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Zoopla is basing its calculation on the average value of a UK home of £263,000 where a first-time buyer had put down a 15 per cent deposit of £39,500. It then calculates  the average monthly mortgage payment compared to the average rent.

London and the South East are the worst affected locations for higher mortgage costs versus rent but it’s still cheaper to buy than rent in selected areas like northern England and Scotland.

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Independent market monitor Moneyfacts says the average two-year fixed-rate mortgage is now 6.76 per cent, and for a five-year fixed deal it’s 6.24 per cent. Rates for both were below 3.0 per cent just over two years ago.

Richard Donnell, head of insights at Zoopla, told the BBC that for the last decade it had been “much cheaper to buy than rent” due to “ultra cheap mortgage rates”.

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He commented: ”Around the country the picture varies as in areas with lower house prices buying is still cheaper than renting. In southern England where prices are higher, access to home ownership is most out of reach and rents are high as well.”

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