Most UK first-time buyers now pay more on mortgages than rent
More than half of UK first-time buyers are paying more each month for their mortgage than they paid in rent, according to estate agent Hamptons. The finding matters because higher borrowing costs have largely removed the immediate monthly saving that once encouraged renters to buy, even though home ownership can bring longer-term benefits.
In September, 56% of first-time buyers faced higher monthly housing costs after buying, the highest share in at least a decade, and their mortgage bills averaged £39 more than their previous rent. Among buyers in their 40s, 67% paid more, with mortgage costs averaging 18% above their rent. Meanwhile, newly agreed rents across Great Britain rose 2.7% over the year to September, reaching an average of £1,433 a month; the average for new lets in Greater London was £2,357.
- 56% of first-time buyers pay more monthly than they did in rent.
- Buyers in their 40s face the biggest increase.
- Newly agreed rents rose 2.7% in the year to September.
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In Britain, people can rent a home from a landlord or buy one, often using a mortgage: a loan repaid over many years. First-time buyers are people buying a home for the first time. Their monthly mortgage payment is only part of the cost of owning a home, which can also include upkeep and other charges.
The comparison with rent matters because many buyers previously paid less each month on a mortgage than they had paid as tenants. Higher borrowing costs have changed that for many recent buyers, while rents have also been rising. Buying can still offer longer-term benefits, such as owning an asset, but the balance depends on each household’s circumstances.
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Originally published by The Guardian as “More than half of UK first-time buyers paying more for mortgage than they did for rent”.