Renting a home in Britain has become more affordable than purchasing one, new data reveals, as mortgage rates have surged following escalating tensions in the Middle East.
For the first time since June last year, the typical monthly payment for a new mortgage now exceeds the average rental cost, according to analysis from property portal Rightmove.
The report indicates that the average advertised monthly rent across Britain stands at £1,547.
This figure is £123 less than the average new monthly mortgage payment, which has reached £1,670.
Rightmove’s mortgage calculation is based on an average asking price of £373,971 for a home, factoring in the average two-year fixed rate observed in April.
It also assumes a buyer places a 20 per cent deposit and opts for a 30-year repayment term.
This significant shift is primarily attributed to a rise in borrowing costs since early March, coinciding with the intensification of conflict in the Middle East.
The resulting financial market volatility has pushed up swap rates, which lenders utilise to price mortgage products, leading many to withdraw a range of deals from the market.
As a result, the average two-year fixed mortgage rate has increased from 4.24% in February to 5.35% in April, Rightmove said.
However, a wave of banks and building societies have been cutting their rates in the past few days in a sign of more positive sentiment entering the market.
Colleen Babcock, Rightmove’s property expert, said: “Mortgage payments have risen quite sharply in a short space of time for new buyers.
“It will be interesting to see whether more would‑be buyers turn to renting temporarily while rates remain high, particularly when monthly costs can exceed average rents and the timing of rate cuts is still unclear.”
Rightmove’s analysis shows that while renting is cheaper than a mortgage on average across Britain, this is not the case for Scotland and the North East, where it remains cheaper to buy.
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The gap between rents and mortgage payments also varies significantly in different regions of Britain.
In the South East, the average monthly rent is £304 less than the average mortgage payment. This rises to £362 in London.
In comparison, in the North West it is £7 cheaper to rent than buy, according to the analysis.
Furthermore, factors such as buying a home with a larger deposit, borrowing less from the bank or spreading payments over a longer period can all lower monthly mortgage costs on an individual basis.
Nathan Emerson, chief executive of Propertymark, said: “This shift highlights the wider economic pressures facing consumers, where affordability challenges are being felt across both renting and buying.
“While renting may appear comparatively cheaper in the short term, it does not necessarily mean it is more affordable overall, particularly as tenants continue to manage the cost of living and limited housing supply.”