Mortgage crisis means its now cheaper to rent in all but these three areas | Personal Finance | Finance

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Renting is now cheaper than owning a first home in all but three parts of the UK against the background of rising interest and mortgage rates.

The figures suggest that an increasing number of first-time buyers are effectively priced out of getting the keys to their own front door in most of the UK.

Currently, the only areas where it is cheaper to buy rather than rent are the South West of England, London and Scotland.

The figures come from the Halifax, who said monthly home-owning costs for first-time buyers have risen 113 percent compared to 82 percent for renting.

The bank looked at the housing costs associated with a mortgage on a three-bed home compared to the average monthly rent of the same property type.

Nationally, the average monthly cost to first-time buyers of buying such a property is put at £1,231, which is £27 lower than renting an equivalent property. That equates to a saving of £324 a year.

The widest gap between the costs of buying and renting the same property is in the East of England.

Here renters would be some £2,325 better off a year, albeit they do not have the benefit and security offered by buying a property.

Renting rather than buying in the South East offered an annual saving of £1,859. The saving was £1,741 in the East Midlands and £1,731 in Yorkshire & the Humber.

Looking at the three areas where buying a home is cheaper, the research found first time buyers in the South West were £1,663 a year better off. The figure was £424 in Scotland and a marginal £148 in Greater London.

All these calculations were based on figures collected up to December 2023. The volatility in the home loans market means the relative costs of a mortgage versus renting are constantly changing.

Kim Kinnaird, mortgages director, Halifax said: “Our latest analysis shows that, in nearly all regions across the UK, first-time buyers are better off renting than owning a similar home.

“We know home ownership can offer long term financial and living stability and that’s why we believe it’s an important step to take.

“Our customers want to create a secure future, so it’s a big priority for us to help people get there. However, elevated borrowing costs, alongside a lack of available homes to buy, is pushing ownership further out of reach for would-be first-time buyers in many parts of the country.

“This is why we’re major participants and big supporters of the Government’s affordable home ownership schemes, such as shared ownership and the mortgage guarantee scheme and we’re committed to helping first-time buyers fulfil their dreams of having a place to call their own.”

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