Mortgage payments have fallen as the price of renting rises

Mortgage payments have fallen as the price of renting rises [Photo: Photobuay via iStock]

The cost of buying a home is falling on average for first timers across the UK at the same time as it is becoming more and more expensive to privately rent a property, it has been revealed. 

According to the new first-time buyer index from credit checking firm Experian, the past year has seen real changes in both sectors. It said that in the third quarter of this year, the average price that first timers will pay on a monthly basis for their mortgage has fallen in 65 per cent of regions when compared to the same period last year. 

The same could not be said in the private rented sector, where in the same period, rental prices have increased for tenants in 57 per cent of regions.

Experian said this means that while many people expect that those who are renting are paying far lower prices than they would if they were to get themselves a mortgage, this is actually far from the case. It found that many people nationwide are actually paying either within ten per cent of or more than they would if they were to buy a home.

The company said that this is something mortgage lenders should take into account when it comes to their decisions about whether or not someone should be greenlit for borrowing. After all, it said, if someone can afford to pay rental prices, then as long as they can raise a mortgage deposit, they should have no problems with making their repayments. 

"What our research shows is that while a mortgage is a major ongoing commitment, renters often have a track record of making monthly payments which are often similar to what they might pay on a mortgage," said Experian’s Jonathan Westley.

He said that by going a step further on the already rigorous checks that mortgage lenders take into account, and looking at rental payments, those making decisions will be able to get a more complete picture of a borrower and what they can realistically afford.