Most first-time buyers pay more than they did in rent

More than half of first-time buyers are paying more on their mortgage than they did in rent, new data suggests.

Hamptons claims 56% of former tenants who bought a home last month with a mortgage saw the cost of keeping a roof over their head rise.

It is the biggest share in at least a decade and up from 33% in September 2022.

When interest rates were low, the financial case for tenants to buy as soon as they could was fairly straightforward.”

It marks a reversal from July, the last time fewer than half paid more each month after buying, at 47%.

In September, the average monthly mortgage payment taken on by a homebuyer leaving the rental market reached £1,227.

For every £1 they previously spent on rent, first-time buyers pay £1.09 towards their mortgage.

Deposit sizes

Buyers whose mortgage payments were more than their old rent purchased with an average loan-to-value of 91%, or a 9% deposit.

Those who ended up paying less than their former rent had an average loan-to-value of 83%, equivalent to a 17% deposit.

Aneisha Beveridge, head of research at Hamptons, (pictured), says: “When interest rates were low, the financial case for tenants to buy as soon as they could was fairly straightforward.

“Saving a deposit was difficult, but buying usually brought an immediate fall in monthly housing costs, alongside the chance to fix those costs for longer. Higher mortgage rates have turned that equation on its head.

“The long-term benefits of home ownership – building equity, greater security and eventually owning a home outright – remain, but the immediate monthly saving that once rewarded tenants for making the leap has largely disappeared.”

Rental prices

Newly agreed rents across Britain rose 2.7% in the year to September, the tenth straight month of acceleration and the fastest pace since November 2024.

It takes the average new let rent to £1,433 a month, up from £1,396 a year earlier.

Beveridge adds: “So far this year, higher rents have mainly been felt by tenants moving home. But if growth continues to pick up, it is likely to feed through to more existing tenants in the coming months as the gap between new and existing rents widens.”