Rent is cheaper than having a mortgage as rates rise

Renting a home in Great Britain now costs less each month than buying with a mortgage, as higher borrowing rates continue to lift repayments for new buyers.

The average advertised rent is £1,547 a month, while the average new mortgage payment is £1,670.

That leaves renters paying £123 less, according to an analysis from Rightmove.

That mortgage figure is based on an average asking price of £373,971, alongside a two-year fixed rate of 5.35% recorded in April.

The calculation assumes a 20% deposit and a 30-year term, typical for a new buyer.

Mortgage rises hit buyers

The platform’s property expert, Colleen Babcock, said: “Mortgage payments have risen quite sharply in a short space of time for new buyers.

“It will be interesting to see whether more would‑be buyers turn to renting temporarily while rates remain high, particularly when monthly costs can exceed average rents and the timing of rate cuts is still unclear.”

Rightmove research reveals that mortgage rates have moved quickly and the average two-year fix stood at 4.24% in February before rising to 5.35% in April.

Scotland and the North East are the only areas where a typical new mortgage is still cheaper than renting, reflecting lower asking prices.

However, London and the South East have the biggest differences between mortgage payments and rents, driven by higher property values.

In London, the average mortgage payment is £3,038 compared with rents of £2,676, a difference of £362.

The South East shows a similar pattern, with a £363 gap between mortgage costs of £2,155 and rents of £1,792.

Regional price differences

Elsewhere, the East of England records a £304 difference, while the South West stands at £299.

Other regions show narrower gaps, including the North West at £7.

More than two-thirds of local authority areas now have renting cheaper than buying. In February, it was closer to one-third.

Westminster leads with a £1,290 difference between mortgage payments and rents, followed by Kensington and Chelsea at £1,249.

Midlothian shows a £391 difference in favour of mortgage payments, with Sefton at £368 and Glasgow City at £325.

Aberdeen City and Barking and Dagenham also show lower mortgage costs than rents.