Lender says many renters would save money by buying their own property

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Many potential first time buyers in the UK would be better off buying a property rather than continuing to rent, according to research from Abbey Mortgages.

The figures show that those living outside of London pay an average monthly rent of £434, while the monthly mortgage payment for buyers with a 25% deposit is £382, based on a rate of 4.39% over a 25-year term.

This works out a saving of £52 a month for those choose to buy rather than continuing renting, or £642 a year, the lender said. However those living in London would be £466.19 worse off each month if they choose to buy as opposed to renting.

Average prices for typical first-time buyer flats and terraced houses have fallen 9% over the last year to £92,861. Abbey calculates that on this basis a first-time buyer will need an average deposit of £23,215 if they want to buy a property with a 25% deposit.

‘Our latest research shows there is hope for first-time buyers trying to buy their first home. It’s now cheaper in all bar one of the regions to buy rather than rent and this shows that saving for that all important deposit is worthwhile too,’ said Nici Audhlam-Gardiner, director of Abbey Mortgages.

There could be a High Street scramble for customers according to another piece of research. While HSBC was the most consistently competitive mortgage lender during the third quarter of this year it was followed by RBS and NatWest with a number of smaller lenders also performing well, according to an analysis from Evaluate Technologies.

The online mortgage service ranked mortgage deals across all product categories and each time a lender appeared in the top 10 in the three months to September 30th they were awarded a point with the lender with the most points ranked as offering consistently good value.

HSBC received a score of 23, significantly ahead of RBS on 18 and NatWest on 17. These were followed by Britannia Building Society in fourth position, Mansfield Building Society in fifth, First Direct in sixth position, Abbey in seventh, Woolwich in eighth place, the Post Office in ninth and Co-operative in tenth position.

A number of the smaller regional building societies performed well. Chelsea Building Society and Leek United Building Society both scored three points while Market Harborough scored two.

‘We’ve seen the beginnings of a high street rate war in September. While HSBC’s discount deal has seen off the competitors over the last quarter, the introduction of a 1.98% deal from Woolwich in September may spark further competition in the market. It will be interesting to see whether HSBC can maintain the top spot in the coming months,’ said Julie Speed, national accounts director at Evaluate Technologies.

‘Regional building societies have continued to show that they play an important part in the mortgage market. A number of smaller building societies have come out with products capable of challenging the big high street banks,’ she added.

 

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