Renting a home is £670 more expensive than the cost of buying a home for a first time buyer, according to the Halifax.
The typical monthly costs of buying a three-bedroom house in the UK for a first time buyer was £666 in June, 8% lower than the average monthly rent on the same property, at £722 per month.
This contrasts to figures recorded in June 2009, during the financial crisis, when the average cost of buying was 16% more a year, or £1,154, than the average rent paid.
Despite the average price paid by a first time buyer for a three-bed home being 25% higher than six years ago, the monthly cost of owning has dropped, as the average mortgage rate has declined from 4.92% to 2.91%.
Over the same period, the average rent grew by 23%.
However, in the last year, average monthly mortgage costs rose by £40, while average monthly rents increased by just £8.
In cash terms, first time buyers in London have experienced the greatest benefits from buying rather than renting in the past year.
The average monthly cost of buying in the capital in 2015 is £1,338 compared to an average monthly rent of £1,419. This is a 6% saving worth £81 per month or £973 over the year.
Mortgage Director at the Halifax, Craig McKinlay, says: “Looking at monthly costs, the combination of lower mortgage rates and declining rental value over the past six years has made it cheaper to buy than to rent.
“While numbers of first time buyers getting onto the housing ladder in the first six months of both 2014 and 2015 has been over 135,000 – almost double the lows seen in 2009 – the issue of building more new homes in the right places needs to be addressed if we are to see sustainable growth.”1