According to Hamptons, slight falls in mortgage rates have brought these back in line and average rates of just over 5% for a first-time buyer with a 10% deposit means an average monthly mortgage payment of £1,328.
This is slightly less than the average rental payment of £1,356. Two years ago, renting was cheaper than buying with a mortgage by £48 per month.
Hamptons said for most of the last 40 years, having a 30-year mortgage with a 10% deposit was cheaper than renting. Since January 1987, there have only been three times that it has been cheaper to rent than to have a mortgage, and each time has been the result of interest rates rising rather than rental costs falling.
This happened in the early 1990s when mortgage rates rose to 15%, and the average monthly mortgage payment with a 10% deposit was £649 compared to the average rent of £358.
Rates began to fall and buying became cheaper over the rest of the decade and most of the 2000s.
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Then rates rose again in 2007 and renting was cheaper than buying until 2010. The last time renting costs were lower than small deposit mortgage costs was in 2022 after the mini Budget.
| Area | Monthly rent | Monthly mortgage | Difference |
| London | £2,255 | £2,370 | -£115 |
| Inner London | £2,631 | £2,725 | -£95 |
| Outer London | £1,978 | £2,101 | -£123 |
| South East | £1,462 | £1,497 | -£35 |
| South West | £1,236 | £1,243 | -£7 |
| East of England | £1,249 | £1,369 | -£120 |
| East Midlands | £983 | £1,009 | -£26 |
| West Midlands | £1,069 | £1,012 | £58 |
| Yorkshire and the Humber | £912 | £858 | £54 |
| North East | £836 | £690 | £146 |
| North West | £1,018 | £892 | £126 |
| Wales | £885 | £880 | £5 |
| Scotland | £1,000 | £749 | £251 |
| Great Britain | £1,356 | £1,328 | £29 |
Source: Hamptons
North/South cost divide
Looking closer at different regions, Hamptons discovered a North/South divide, showing that in all four Southern areas of England, it was cheaper to rent than buy on a monthly basis.
In London, it has been cheaper to rent a home than pay for a mortgage since July 2022, when average mortgage rates were 3.69%.
Currently, the average Londoner can save £115 per month by renting.
Meanwhile, in Northern regions, it is cheaper to buy than rent on a monthly basis, even when interest rates are higher.
Hamptons’ data found it has been cheaper to buy a home in the North East than it is to rent since July 2011.
The firm said this showed how mortgage rate changes impacted each part of the country differently, adding that Londoners with a 10% deposit needed interest rates to average 4.6% for the cost of renting and buying to equalise, while mortgage rates of above 6% made buying as expensive as renting in the North.
Hamptons said this also highlighted how much buyers paid in interest, especially when they purchased more expensive homes.
It said with the average interest rate available to someone with a 10% deposit standing at 5.11%, over a 30-year term, it would take 16-and-a-half years for the repayment to outweigh the interest element of their monthly mortgage payment.
When interest rates rose to 6.57% in August 2023, it would have taken 19-and-a-half years for mortgage repayments to exceed the mortgage interest.
This means 86% of the first payment towards a mortgage taken in August 2023 covered the interest charged on the loan.
When average rates were 2.38% in March 2022, mortgage repayments would have outweighed the interest after just a year, with this making up 49% of a first-time buyer’s first payment. If rates stayed the same over the 30-year term, someone paying a 2.38% rate would pay 69% less in interest, or £206,000 on the average loan, than someone on a rate of 6.57%.
Aneisha Beveridge, head of research at Hamptons, said: “Since the 1980s, it’s typically taken an economic shock for renting to drop materially below the cost of buying. When this happens, it’s almost always driven by the cost of buying rising rapidly, pushed up by mortgage rates jumping for those with smaller deposits, who are perceived to be riskier borrowers when prices may fall. But we are now seeing the impact of the inflation shock unwinding.
“Relative to the cost of paying a mortgage, rents tend to be much less volatile. Typically, they’re tightly tied to both wages and inflation. This means that while they rarely fall, they also tend to rise more slowly unless general inflation escapes its 2% target. When this happens, rents are often driven up by the higher costs faced by landlords, like we saw in 2022-2023, ranging from higher mortgage payments to bigger bills from tradesmen.”
She added: “Should central banks perceive an emerging trade war as a growing threat to economic growth, it could create room for faster rate cuts. This could translate into falling mortgage rates, potentially cutting the cost of both buying and potentially renting too.
“Given these costs form a large part of official inflation statistics, this would put material downward pressure on the headline inflation figure.”
Rental growth still below 2%
In the year to March 2025, Hamptons found the cost of a newly agreed rental tenancy in Britain rose 1.5% to £1,536 per month. This was the third month in a row that annual rental growth had been less than 2% and the fifth month it was below inflation.
The average cost of renewing a tenancy increased 4.2% to an average of £1,250 per month, or £106 less per month than someone moving into a new rental home.
Hamptons said London was dragging down average rental growth, with rents 1.7% lower than this time last year. In the capital, a newly let home attracts a rent of £2,255 per month, the lowest level in nearly two years.
Declines in rental growth are more evident in Inner London, where this fell 4.4% to £2,631 per month, while Outer London recorded an increase of 1.2% to £1,978.
