The monthly cost of a home for a first-time buyer is £110 less than if they were renting.
According to new research by Halifax, the average first-time buyer will spend £567 a month on mortgage repayments and other costs, while rent for the same property would be £677.
The 15% differential is in contrast to 2008 when the average cost of buying was 29% (£212) more than renting.
The decline in costs for a first-time buyer has been driven down by falls in mortgage rates and house prices. Meanwhile, rents have been rising.
The average mortgage rate for a new borrower is now 3.84% compared with 5.91% in mid-2008. The average first-time buyer house price has fallen by 14% over the same period to £124,378.
Although the size of the deposit needed today is £27,127, equivalent to 20% of the property value, this is still a little lower than the average of £28,751 in July 2008.
Despite the greater affordability, the number of first-time buyers has fallen by almost a quarter since 2008. There were 84,000 first-time buyers in the first half of this year – 23% lower than in the same period in 2008.
Around 60% of all mortgage applications are currently rejected.
The Halifax says that buying is now cheaper than renting in every region of the UK –but in the South-East it is a close run thing, with the cost of buying only 1%, or £9, lower than renting.
As well as taking mortgage payments into account, the Halifax also included income lost by funding a deposit, insurance costs, and costs of maintenance and repair.
Nigel Stockton, financial services director at Countrywide, the UK’s largest mortgage broker and property services group, said: “Whilst lenders are becoming much more competitive with the mortgage products on offer, it is the level of mortgage deposit that consumers are expected to find and loan to values which now remain the critical issue, not affordability.
“This is definitely holding back the housing market and we expect current lending levels to be lower than in 2010 and there are no signs that this will change in the short term.“
The Council of Mortgage Lenders has reaffirmed its lending forecast of £140bn for 2011. This looks optimistic to Countrywide.”
