Hamptons' research, based on data covering last month, found that 56% of first-time buyers reported monthly mortgage bills exceeding their previous rent, paying on average £39 more. The finding underscores how rising mortgage rates have eroded the financial advantage of home ownership for many new entrants to the market.
Aneisha Beveridge, head of research at Hamptons, said that when interest rates were low, "the financial case for tenants to buy as soon as they could was fairly straightforward." She added: "Higher mortgage rates have turned that equation on its head. The long-term benefits of home ownership – building equity, greater security and eventually owning a home outright – remain, but the immediate monthly saving that once rewarded tenants for making the leap has largely disappeared."
The impact varied by age. Two-thirds (67%) of first-time buyers in their 40s took on a mortgage that cost more than their rent, with monthly costs averaging 18% higher than their previous rent.
Meanwhile, the rental market continues to tighten. Hamptons reported that newly agreed rents across Great Britain rose 2.7% annually in September, the fastest pace in nearly two years. The average monthly rent nationally now stands at £1,433, up from £1,396 a year earlier. In Greater London, the average for new lets reached £2,357, up 1.5% year-on-year. The steepest increase was in the south of England, where the average rose 3.7% to £1,419.
Beveridge noted that higher rents have so far mainly affected tenants moving home, but that if growth continues, it is likely to feed through to more existing tenants as the gap between new and existing rents widens.