Key facts
- 56% of first-time buyers pay more for mortgages than rent.
- Average mortgage payment for first-time buyers is £39 higher than rent.
- Average five-year fixed-rate mortgage hit 6% this month.
- Average two-year fixed mortgage rate was 5.96% on Monday.
- Newly agreed rents rose 2.7% annually in September.
- Average rent in Great Britain is £1,433 per month.
A majority of first-time UK buyers now pay more towards their monthly mortgage bills than they used to pay in rent, according to estate agent Hamptons. Last month, 56% of first-time buyers reported their monthly mortgage payments exceeded their previous rent, the highest proportion in at least a decade. On average, they paid £39 more.
Mortgage rates have been increasing in the UK due to volatility in bond markets affecting swap rates for fixed-rate deals. Earlier this month, the average cost of a five-year fixed-rate mortgage surpassed 6% for the first time in three years. On Monday morning, the average rate stood at 5.99%, with the average two-year fixed mortgage rate at 5.96%, according to Moneyfacts.
Aneisha Beveridge, head of research at Hamptons, noted that higher mortgage rates have reversed the financial advantage tenants once had when buying a home. While the long-term benefits of homeownership persist, the immediate monthly savings have largely vanished.
First-time buyers in their 40s experienced the most significant jump in housing costs, with 67% facing higher mortgage payments than rent, averaging 18% more. Meanwhile, rents continue to rise, with newly agreed rents across Great Britain increasing by 2.7% annually in September, the fastest pace in nearly two years. The average national rent is now £1,433 per month, up from £1,396 last year. In Greater London, new lets averaged £2,357 per month, a 1.5% increase, while the south of England saw the largest rise of 3.7% to £1,419.