First-time buyers face mortgage payments above rent

More than half of tenants who bought their first home in September were paying a mortgage that was higher than the rent they had been paying, research reveals.

For these buyers, getting the keys no longer brought the immediate monthly saving that most could expect before 2022.

Hamptons’ analysis of Connells Group data found that 56% paid more after buying, the highest proportion in at least a decade.

As recently as July, fewer than half faced an increase in their monthly payments.

Mortgage costs overtake rent

Hamptons’ head of research, Aneisha Beveridge, said: “When interest rates were low, the financial case for tenants to buy as soon as they could was fairly straightforward.

“Saving a deposit was difficult, but buying usually brought an immediate fall in monthly housing costs, alongside the chance to fix those costs for longer.”

She added: “Higher mortgage rates have turned that equation on its head.

“Today, more than half of renters who buy are taking on a higher monthly payment than the rent they have left behind.”

Deposits shape mortgage payments

First-time buyers whose mortgage payments exceeded their previous rent had an average deposit of 9%, compared with 17% among those paying less after buying.

Age also made a difference, with buyers in their 40s more likely to face higher monthly payments than younger purchasers.

Hamptons partly attributed this to older buyers choosing larger homes and taking shorter mortgage terms, averaging 27 years against 34 years for buyers in their 20s.

Among that younger group, fewer than half paid more on their mortgage than they had previously paid in rent.

New let rents rise

Meanwhile, annual growth in newly agreed rents across Great Britain accelerated for the tenth consecutive month, reaching 2.7% in September, its fastest pace since November 2024.

The average monthly rent stood at £1,433, with both the South East and South West recording annual increases above 4% for the first time in two years.

Among existing tenants whose rent went up, the average increase was 5.6%, unchanged from August.

However, across all tenants, including those whose payments stayed the same, annual rent growth slowed to 1.9%, down from 3.9% a year earlier.