First-Time Buyers Face Higher Mortgage Costs Than Rent

A majority of first-time buyers in the UK are now paying more for their monthly mortgage bills than they did for rent, according to a report by estate agent Hamptons. In September, 56% of first-time buyers reported that their mortgage payments exceeded their previous rental costs, the highest proportion in at least a decade. On average, these buyers paid £39 more in mortgage costs than they had in rent.

Key Details

Mortgage rates have been rising, influenced by volatility in bond markets following the outbreak of war in the Middle East. The average cost of a five-year fixed-rate mortgage surpassed 6% for the first time in three years, reaching 5.99% as of Monday, while the two-year fixed mortgage rate was 5.96%, according to financial analyst Moneyfacts. Aneisha Beveridge, head of research at Hamptons, noted that higher mortgage rates have reversed the financial incentives for tenants to buy homes, stating, "Higher mortgage rates have turned that equation on its head."

Background

The rental market continues to see significant increases as well. Newly agreed rents across Great Britain rose by 2.7% year-on-year in September, marking the fastest pace in nearly two years. The average rent now stands at £1,433 per month, up from £1,396 in September 2022. In Greater London, the average monthly rent for new tenancies reached £2,357, reflecting a 1.5% increase compared to the previous year. The South East and South West regions also reported annual growth rates above 4% for the first time since September 2024.

Related coverage: Homeowners Struggle with High Mortgage Rates Amid Stagnation, US Mortgage Rates Hit 6.71%, Highest Since July 2025.

Based on reporting by: theguardian.com, cityam.com