The Inside Edge
New research released by Halifax has shown that the average monthly mortgage cost of buying a two-bedroom flat is approximately £567 for a first-time buyer. That’s £110 less than the rent paid on a property of comparable size in the same area.
The cost of entering the property market has fallen by around 40% since 2008. This is due to lower mortgage rates and a stagnant housing market. In comparison, the price of renting a property has fallen a fraction of that amount and has actually started to rise over the past year.
Suren Thiru, housing economist at Halifax, said that the current economic climate is a good time to buy if you are a first-time buyer.
“The recent decline in the cost of buying a property for first-time buyers compared to renting has been substantial. and reflects the drop in both mortgage rates and house prices since 2008 as well as a marked increase in the average rent paid over the last year,” said Ms Thiru.
We’ve recently reported that more and more mortgage companies are releasing more products to attract first-time buyers and this combined with the existing low interest rate of 0.5% is making the market quite attractive to those looking to get on the property ladder. Mortgages are now at their most affordable since 1999.
Ms Thiru also said that the gloomy state of the economy is putting many people off entering the property for the first time.
“While these affordability gains are welcome, conditions in the housing market for those looking to get onto the property ladder remain challenging,” she said.
It’s also worth pointing out that Halifax’s calculation does not include the deposit required to purchase a new property. The average deposit required by first-time buyers is £27, 127.