With the fall in mortgage rates in the past three years a three bedroom home mortgage payment could cost only £600 while rent for the same would be £700. This is a drastic change from three years past when during the height of the financial crisis with higher rates, it was more expensive to purchase than rent.
The cost in March of 2008 to buy was £1060 compared to £760 to rent per research from Halifax, the largest mortgage lender in Britain. At that time the average rates were 5.8% while they are down around 3.6% now.
Halifax housing economist Suren Thiru said this marked decline in the rate of mortgages has made for better affordability for those that are able to enter the market and easing pressure for the existing mortgage holders’ disposable income. The rates are expected to rise therefore the difference between buying and renting will not be so marked and will narrow a bit.
Even thought the rates are lower than before and could save a great deal of money to the homeowner, the banks are tightening their criteria about lending and also demand that you carry a significant amount of deposits because of the continued fear that people will default on their loans due to higher unemployment, the increase in the VAT and the volatile economy.