Abbey: The tide is turning for FTBs

Published 18th Feb 2009

New research from Abbey has shown that house price falls are making it cheaper for first-time buyers with big deposits to buy a home than rent in most UK locations...

London and East Anglia are the only regions where renting is still less expensive than buying for people with a 25% deposit, according to high street bank Abbey. The group said the average price of a typical first-time buyer property, like a flat or terraced house, has fallen by 12.6% during the past year to average £111,628.

At the same time, the Bank of England Base rate has dropped from 5.25% in February last year to a record low of 1%.This has made mortgage rates for people with large deposits increasingly affordable.

Big savings in the North-West

The research found that outside of London and East Anglia, the average monthly rent on a typical first-time buyer property is £429. But those buying a similar home with a 25% deposit would pay an average of £378 a month, based on a mortgage rate of 4.19%.

The North West offered the biggest savings to buyers over renters, with it costing around £77 a month less to buy a property in the region than to rent. Wales was second best for buyers, with savings of around £68 a month over renters. But it is still significantly cheaper for people to rent a home rather than buy one in London

The difference is smaller in East Anglia, with first-time buyers able to save around £5 a month by renting a property rather than buying it.

Reaping the benefits

Nici Audhlam-Gardiner, director of Abbey Mortgages, said: "The tide is turning in favour of first-time buyers. With property prices falling and competitive mortgage offerings now available, those who have built a significant deposit will be able to reap the benefits across most of the country with lower monthly outgoings."

Source: ' TMC '

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