First-time buyers save £670 a year paying for their home compared with the cost of renting a property however the gap is narrowing, according to research from Halifax.
The average monthly costs associated with owning a three-bedroom house in the UK for a first-time buyer was £666 in June 2015, some 8% lower than the typical monthly rent on the same property type of £722 a month.
Falling mortgage rates in recent years have cut costs for first-time buyers at a time when rents have been rising.
Back in June 2009, during the financial crisis, the average cost of buying was 16%, or £1,154 a year, more than the average rent paid.
Since then, the average price paid by first-time buyers for a three-bedroom house has risen 25%, but costs have fallen as the average mortgage rate has dropped from 4.92%to 2.91%. Over the same period rents have risen by 23%.
But the first-time buyers’ advantage over renters has narrowed again over the past year amid house price rises.
In June 2014, renters were paying £1,018 a year more than first-time buyers.
Craig McKinlay, mortgage director, Halifax, said: “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 on to 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.”