More than half of first-time buyers who purchased a home in September found themselves paying more each month on their mortgage than they had previously paid in rent. The findings suggest that becoming a homeowner no longer guarantees immediate savings on monthly housing costs, as was often the case before 2022.
Research by Hamptons, based on Connells Group data, found that 56% of first-time buyers faced higher monthly payments after purchasing their property. This was the highest proportion recorded in at least ten years. In July, the figure was still below 50%.
Mortgage Payments Now Exceed Previous Rents
Aneisha Beveridge, head of research at Hamptons, explained that low interest rates once made buying a property financially attractive for renters. Although saving for a deposit could be challenging, homeowners could often benefit from lower monthly housing costs and the security of fixing their mortgage payments for a set period.
However, rising mortgage rates have changed the financial picture. Increasingly, tenants moving into homeownership are finding that their new mortgage costs more each month than their previous rent.
Deposit Sizes Affect Monthly Costs
The size of a buyer’s deposit appears to play an important role in determining their monthly payments. First-time buyers whose mortgage payments were higher than their former rent had typically put down a deposit of 9%. By comparison, those paying less each month after buying had an average deposit of 17%.
Age was another factor. Buyers in their 40s were more likely to face higher monthly mortgage payments than younger purchasers.
Hamptons suggested this could partly reflect older buyers purchasing larger properties and choosing shorter mortgage terms. Their mortgages averaged 27 years, compared with 34 years for buyers in their 20s.
Among buyers in their 20s, fewer than half ended up paying more each month on their mortgage than they had previously paid in rent.
Rents for Newly Let Properties Continue to Rise
While mortgage costs are putting pressure on first-time buyers, rents for newly agreed tenancies across Great Britain are also increasing.
Annual rental growth accelerated for the tenth consecutive month in September, reaching 2.7%. This was the fastest rate since November 2024, according to Hamptons’ rental market data.
The average monthly rent reached £1,433, while the South East and South West both recorded annual increases of more than 4% for the first time in two years.
For existing tenants who experienced a rent increase, the average rise was 5.6%, unchanged from August. However, when all tenants were included, including those whose rents remained unchanged, annual rental growth slowed to 1.9%, down from 3.9% a year earlier.
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