Rising mortgage costs mean most first-time buyers moving out of rented accommodation are now paying more each month than they did as tenants, reducing the financial incentive to get on the housing ladder and adding to the already considerable pressure on the supply of rental properties.
New research from Hamptons shows that 56% of first-time buyers who left rented accommodation in September took on mortgage payments that were higher than their previous rent. That is the largest proportion in at least a decade and is up from 33% in September 2022.
The higher monthly cost of buying
According to the data, the average first-time buyer exiting the rental market in September took on monthly mortgage payments of £1,227.
For every £1 they previously paid in rent, these buyers are now paying £1.09 for their mortgage. In September 2022, they paid just 90p.
Aneisha Beveridge, head of research at Hamptons, 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.”
Deposit size is critical
The size of a buyer’s deposit, though, is a critical factor in whether they are paying more or less for their mortgage than their rent.
First-time buyers whose mortgage payments exceeded their previous rent had put down an average deposit of just 9%, compared with 17% for those whose mortgage payments were lower.
Age makes a considerable difference, too. Buyers in their 20s paid an average of 7.5% less than their previous rent, while those in their 30s paid 6.9% more and those in their 40s paid 18.2% more. This is partly because older buyers tend to purchase larger properties and, if they have repayment mortgages, shorter mortgage terms increase their monthly payments.
A changing balance
Previous research from Hamptons shows how the financial balance between renting and buying has been in a state of flux in recent years.
Following the financial crisis, when the Bank of England cut its base rate to just 0.5% in 2009, buying became considerably cheaper than renting for much of the following decade. As recently as November 2021, Hamptons calculated that buying with a 10% deposit cost £160 less per month than renting an equivalent property.
But since then, the cost advantage has shifted several times. Following the rise in mortgage rates in 2022, renting became substantially cheaper than buying for prospective purchasers with smaller deposits.
In February 2023, Hamptons calculated that buying a comparable property with a 10% deposit cost £412 more each month than renting it.
The gap subsequently narrowed. By April 2025, Hamptons calculated average monthly mortgage payments of £1,328 for buyers with a 10% deposit, slightly below the £1,356 cost of renting an equivalent property.
Now, with mortgage rates likely to remain elevated, the balance could settle in favour of renting for a more sustained period.
The impact on rental demand
If that results in more tenants deciding to postpone buying a property, fewer homes could become vacant as tenants move into ownership.
That would add to rental demand at a time when Hamptons reports the average rent on newly let homes in Great Britain was up by 2.7% in the year to September to £1,433 a month, up from £1,396 a year earlier.
It was the tenth consecutive month of accelerating annual rental growth and the fastest increase since November 2024.
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.”
