House prices: Cost of buying compared to renting narrows

In June renters were paying only £56 a year more than first-time buyers

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The Independent Online

First-time buyers save £670 a year paying for their home compared with the cost of renting but the gap is narrowing, according to research.

Data from the lender Halifax showed that in June the average monthly cost of a three-bedroom home for these buyers was about £666, compared with £722 for renters– £56 a month more.

Falling mortgage rates in recent years have cut costs for first-time buyers at a time when rents have been rising.

In June 2009, the average cost of buying was £1,154 higher per year than renting. Since then, the average price paid by first-time buyers for a three-bedroom house has risen by 25 per cent, but costs have fallen as the average mortgage rate has dropped from 4.92 per cent to 2.91 per cent. Rents have risen by about 23 per cent in the same period, Halifax said.

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.