Morgage payments now cheaper than renting in all areas of the UK except one

Martin Lewis gives advice on overpaying on your mortgage

Housing costs soared over the past year. Private rental prices are up by just under five percent and the average quoted mortgage rate is close to six percent.

According to the latest Owning vs Renting Review by Halifax, the monthly cost of owning a home for first-time buyers in the UK is £971 – £42 cheaper than renting an equivalent property.

This means – provided they can come up with a deposit to the tune of £65,000 on average this year – new homeowners can net savings of £498 a year.

This national figure varies widely across the country, with renters thousands of pounds worse off in some areas, and better off in just one.

The difference is greatest in London, where both asking prices and rents are higher than anywhere else in the country.

Average owning costs – including mortgage payments, maintenance, repairs, minor alterations and insurance costs as well as income lost by funding a deposit rather than saving – come to £1,828 in the capital. 

With the average rent reaching £2,074, those on London’s property ladder save £246 a month, working out to £2,950 a year. 

Homeowners in the South West were at the second-biggest advantage, saving £2,492 annually, followed by Scotland (£2,295) and the North West (£1,737).

Of the UK’s 12 regions, only in the East of England is it cheaper to rent. With homeowning costs of £1,212 and rents of £1,122 on average, tenants there save £1,078 over a year.

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Halifax’s Mortgages Director, Kim Kinnaird said: “Our latest analysis shows that becoming a homeowner can bring significant savings for people. Nationally, homeowners are almost £500 better off than renters each year. 

“Of course, making the move from renting to home ownership can be difficult for many, as raising a sufficient deposit and then finding the right property can be challenging.”

Housing affordability in Britain has worsened considerably over the past 20 years. Back in 2000, the average property in England cost 4.2 times the median annual wage. In 2022, with house prices hovering just below £300,000 and salaries at £33,000, this ratio has almost doubled to 8.3.

Halifax’s data show deposits being raised for mortgages in the North East are the lowest in the UK at £32,920 – equivalent to 19 percent of the property value – and highest in London at £188,663 (32 percent).

Ms Kinnaird added: “While a predicted fall in house prices this year will be welcome news for those looking to buy their first home, it doesn’t change the fact that getting on the property ladder remains expensive – a problem that is compounded when rents are high, impacting the ability to save.”

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