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Owning a house is cheaper than renting

Saturday, 23 April 2011 12:05 AM

Figures published by Halifax today showed that paying a mortgage is generally cheaper than renting.

In a typical month, tenants will pay £98 more in rent than a homeowner will spend on their mortgage.

Based on average figures of £608 per month for a mortgage on a three-bedroom house in the UK or £706 to rent one, that represents a 14 per cent saving for buyers.

Renters spend almost a third (31 per cent) of their income on rent, while for owners the figure stands at closer to a quarter.

This is a reversal of the situation seen in 2008, when rent accounted for 39 per cent of the average income but mortgage costs stood at 56 per cent – more than double their current level.

Halifax housing economist Suren Thiru said: "The typical monthly mortgage payment has declined by over a third since 2008 as a consequence of falling mortgage rates and lower house prices."

With the Bank of England expected to raise the base rate from its historical low of 0.5 per cent within the next few months, mortgage costs may be set to rise accordingly; however, repayments would have to increase by £98 or more to redress the balance.

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