Cheaper to Rent for First Time Buyers 2009-01-24Posted by clype in Money, Statistics.
Tags: hommes, house buying, property market
It is cheaper for first-time buyers to rent a home than buy one, despite a drop in house prices in England & Wales, it has been revealed.
According to a recent survey south of the border, high mortgage rates imposed on first-time buyers continue to price them out of the market, even though house prices have fallen by 16 per cent over the last year.
It would actually be cheaper for people to buy a home rather than rent in 95 per cent of the country — only if first-time buyers were given the best borrowing rates, but the majority of these deals are currently restricted to people who have at least a 40 per cent deposit.
There are now just three mortgage lenders offering home loans to people with only a 5 per cent deposit, and they charge rates of about 7 per cent.
By contrast, the best deal available on the market for someone borrowing 80 per cent of their home’s value is less than half of this, at 3.39 per cent, while most top rates demand a deposit of 40 per cent.
Nicholas Leeming, director of propertyfinder.com, said:
‘First-time buyers are the bedrock of the housing market.
‘Lenders are squeezing the life out of the housing market with the extortionate mortgage rates they are demanding from those wanting to get on the ladder.
‘Thousands are champing at the bit to take advantage of lower house prices, but simply can’t get a mortgage.
‘It’s no wonder first-time buyers are now an endangered species.’
Hounslow is the best value area for a first-time buyer, where it is 518 GBP/month cheaper to buy a two-bedroom property than to rent one, according to the study, which compared sales prices and rents of 110 000 of these homes.
Newham in east London was next best, with buyers 394 GBP/month better off than renters, followed by Sutton, Surrey, where they save 378 GBP/month.
But in north Devon it is 389 GBP/month cheaper to rent than to buy, and in Restormel, in Cornwall, it is 373 GBP/month cheaper.
- CLIPPED FROM: ‘New buyers ‘better off renting”, UK MSN, 2009-01-24