Halifax have issued research indicating that the cost of purchasing a UK home is now 14% cheaper than renting the same property.
The historic low rates of interest and relative low rental yields being obtianed by landlords throughout England an Wales has been credited with the reason for the major differential.
In looking at the figures, on average the costs incurred when buying a three bedroom house in the UK were pegged at £608 in March this year, nearly £100 down on the average rental price of £706 for the same size property.
In 2008, the average cost of buying a home was 43% more expensive than renting, due to higher mortgage rates.
The average mortgage rate last month was 3.59%, which is significantly lower than the 5.82% recorded in March 2008.
Suren Thiru, housing economist at Halifax, said: “Although the current trade-off between buying and renting is expected to narrow when interest rates start to rise again, the long-term benefits associated with investing in bricks and mortar are likely to ensure that buying will continue to be viewed favourably by many.” The research is positive news for homebuyers but Rob Killeen, Business manager at Capital Fortune Mortgage Brokers sounds a note of caution. ” Whilst it may currently be cheaper to rent, the research does not build in all the ssociated costs of purchasing a property, includer lender arrangement fee, valuation, stamp duty and a whole host of removal costs. In addition as rates inivetiblly rise, the differential will narrow and buyers need to ensure the mortgage is affordable rather than just cheaper when embarking on any long term contract” he warned