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Buying “£1,300 cheaper than renting”

First-time buyers now save £1,300 a year by taking out a mortgage rather than renting, according to Britain’s largest lender, the Halifax.

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Based on a three-bedroom house, the average first-time buyer pays £677 a month.

The average rent paid on the same-sized property is £787, giving owners a monthly saving of £110.

But mortgages rates would not have to rise by very much for the reverse to be true.

The Bank of England base rate has been at a record low of 0.5% for more than five years, and that has contributed to cheap borrowing costs.

As a result, the average mortgage rate is low by historical standards, at 3.06%.

Once interest rates have risen to 1.5%, renting begins to be cheaper than buying, says the Halifax.

Should base rate rise to 2.5% – which many people expect over the next few years – the average first-time buyer’s mortgage would cost £897 a month, £110 more than if they were renting, said the Halifax.

However landlords faced by higher mortgage costs would be likely to increase rents.

Financial markets expect the first rate rise to happen at the end of 2014 or the beginning of 2015, although the Bank has suggested the first rise will be small.

Read More: http://www.bbc.co.uk/news/business-28897774