Conditions ripe for first-time buyers
In every part of the country other than London, average monthly rental prices now exceed those for the average mortgage repayment.
According to the bank's research, would-be buyers currently renting outside of London could save themselves an average of £1,040 a year if they were able to own their own property. The average monthly rent in the UK (excluding London) is currently just over £420 compared to monthly repayments of £334 for the average first-time buyer – equating to an average saving for homeowners of £86 a month.
Only those in the capital will be better off if they continue renting. Despite rental prices in London being roughly 56 per cent higher than the average across the UK, at £701 a month, exceptionally high house prices mean it would, on average, cost potential first-time buyers an additional £359 a month to buy.
The research into typical first time buyer flats and terraced properties found the average price across the country to be £115,657. This means that a first-time buyer, applying for a 75 per cent loan-to-value mortgage (the average LTV for first-time buyers according to the Council of Mortgage Lenders) would require a deposit of £28,914.
Phil Cliff, director of mortgage marketing at Santander UK said: "People have been justifiably cautious in approaching the housing market in recent months but this research strongly supports the idea that in the majority of cases owning can be less expensive than renting.
"The now ‘average' LTV of 75 per cent for first-time-buyers has provided an obstacle in some cases but saving for a deposit is clearly a wise move. Lenders are also looking to offer higher LTV products while the Government's announcement that it will help boost the number of new homes is all positive news for those wishing to take their first steps on the property ladder. As the ‘Home of UK mortgages' we were the first lender to increase our maximum first-time-buyer LTVs on apartments and houses to 80 per cent and 90 per cent respectively, demonstrating our continued commitment to the FTB market."
The savings to be made through buying, as opposed to renting, have increased dramatically in the last six months. In October last year the average saving for those potential first-time buyers able to buy was £52 a month. The climb in potential savings to £87 now represents an increase of 67 per cent.
Phil Cliff continued: "The first few months of 2010 have seen rents start to climb which has meant that the savings to be made for potential first-time buyers have grown considerably. We hope the new Government honours the last's pledge on stamp duty to continue support for the FTB market and help those considering getting on the housing ladder to buy rather than rent."
Date: 15th, June, 2010
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