Banking chain Halifax has found that buying a new home is 10 percent cheaper than renting. A new study from the bank indicates that homeowners save around £875 a year compared to renters due to cheaper mortgage bills and low interest rates.
The cost of buying a home in the UK has declined over the past few years, as lower-than-normal interest rates and improved credit availability make it easier for many first-time buyers to invest in property.
However, mortgage rates have increased slightly in the last twelve months and the deposit required for many home loans continues to be an issue for buyers. Halifax claims that this is compensated for by the increase in the cost of renting a home.
According to the bank’s latest study, the average monthly cost of renting a three-bedroom home is £672. In comparison, renting a three-bedroom home will cost as much as £745 per month on average, representing poor value for money.
The different in pricing between rentals and monthly mortgage bills has decreased slightly in the last twelve months. Last year, the average monthly cost of buying was £650, and the average monthly cost of renting a similar home was £728.
Because of the financial crisis, the Bank of England’s record low 0.5 percent interest rates have encouraged many former renters to buy. Analysts note that, prior to the crisis, it was significantly less expensive to rent property than to buy.
For example, a home that would cost just £672 per month to own today cost up to £1,072 in 2008. During the same time period, the same home might be available to rent for as little as £720 per month, despite the surge in homes’ sales valuations.
Because of the more affordable mortgage rates, an increasing number of would-be homeowners are taking the chance to purchase property at rates that, just three or four years ago, would have been unavailable.
