More than half of UK first-time buyers paying more for mortgage than they did for rent

A majority of first-time UK buyers now pay more towards their monthly mortgage bills than they used to pay in rent, the estate agent Hamptons has found.

Last month 56% of first-time buyers said their monthly mortgage bills exceeded their previous rent, the highest proportion in at least a decade, according to Hamptons. They paid £39 more on average.

Mortgage rates have been climbing in the UK since the outbreak of war in the Middle East, as volatility in the bond markets has driven up the swap rates that affect the pricing of fixed-rate deals.

Earlier this month the average cost of a five-year fixed-rate mortgage hit the 6% barrier for the first time in three years. On Monday morning the average rate stood at 5.99%, while the average rate for a two-year fixed mortgage was 5.96%, according to the financial analyst Moneyfacts.

Aneisha Beveridge, the head of research at Hamptons, said 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.”

First-time buyers in their 40s faced the biggest jump in their housing costs, with 67% taking on a mortgage that was more expensive than their rent, Hamptons found. On average, their monthly mortgage costs were 18% higher than their rent.

Meanwhile, the price of renting continues to climb. Newly agreed rents across Great Britain rose at by 2.7% on an annual basis in September, the fastest pace in almost two years.

The average rent now stands at £1,433 a month nationally, up from £1,396 in September last year.

In Greater London the average monthly rent on new lets stood at £2,357, up 1.5% compared with last year. It increased the most in the south of England, where the average rose by 3.7% to £1,419, Hamptons found.

Beveridge said: “So far this year, higher rents have mainly been felt by tenants moving home. But if growth continues to pick up, it is likely to feed through to more existing tenants in the coming months as the gap between new and existing rents widens.”