Now is a good time for first time buyers to get a foot on the property ladder, this is the opinion of Santander, which has found that it is currently cheaper to buy than to rent.
New research from Santander Mortgages has found that a 'vast majority' of potential first time buyers would be financially better of buying a property instead of renting because the monthly mortgage payments would be cheaper.
The average first time buyer mortgage payment is currently £334 a month, a saving of £86 compared to the average cost of renting at £420 a month, saving the average first time buyer £1,040 a year, Santander has calculated.
The exception to this rule is London, where renting is still cheaper than buying, costing around 56 per cent higher than the national average at £701 a month, but it would cost first time buyers an additional £359 a month in mortgage payments if they were to buy in London.
Commenting on the research, Phil Cliff, director of marketing at Santander Mortgages, said: "People have been justifiably cautious in approaching the housing market in recent months but this research strongly supports the idea that in the majority of cases owning can be less expensive than renting."
While recent years have seen the average loan to value for first time buyer mortgages fall to 75 per cent, proving an obstacle to home ownership for many, lenders' LTVs are starting to creep back up.
Santander boasts that it was the first lender to increase the maximum first time buyer loan to values to 80 and 90 per cent on apartments and houses respectively, which, Mr Cliff says, demonstrates "our continued commitment to the FTB market," adding:
"The first few months of 2010 have seen rents start to climb which has meant that the savings to be made for potential first-time buyers have grown considerably. We hope the new Government honours the last's pledge on stamp duty to continue support for the FTB market and help those considering getting on the housing ladder to buy rather than rent."
© Fair Investment Company Ltd
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