Renting a home in Britain has become more affordable than purchasing one for the first time since June last year, according to new data from property portal Rightmove. The average advertised monthly rent across Britain now stands at £1,547, which is £123 less than the average new monthly mortgage payment of £1,670.
Sharp Rise in Borrowing Costs
This significant shift is primarily attributed to a sharp rise in borrowing costs since early March, influenced by escalating tensions in the Middle East and increased swap rates. As a result, the average two-year fixed mortgage rate has increased from 4.24 per cent in February to 5.35 per cent in April, leading many lenders to withdraw deals from the market.
Regional Variations
While renting is cheaper than a mortgage on average across Britain, it remains more affordable to buy in Scotland and the North East, with substantial regional variations in the cost difference. In Scotland, for example, the average monthly mortgage payment is still lower than the average rent, while in London, the gap is much wider in favour of renting.
The data highlights how the recent surge in mortgage rates, driven by global geopolitical tensions, has shifted the affordability landscape for British households. Experts warn that if rates remain elevated, more potential buyers may be forced to remain in the rental market, further increasing demand and potentially pushing rents higher.
