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Almost £900 a year cheaper to buy than rent

Homebuyers in the UK are £875 (10%) a year better off buying their own home instead of renting, according to research by Halifax.

The average monthly costs associated with buying a three bedroom house stood at £672 in June 2013; £73 (or 10%) lower than the typical monthly rent of £745 paid on the same property type. The percentage difference between the monthly cost of buying and renting has fallen marginally from a year earlier.

Five years ago renting was considerably financially more attractive than buying. In June 2008 the average monthly cost associated with home buying was £352 (49%) higher than renting – equivalent to an annual cost difference of £4,226.

The substantial improvement in the affordability of buying relative to renting since 2008 largely reflects a 37% decline in home buying costs over the past five years, says Halifax.

Both lower house prices and mortgage rates have contributed to making home buying more affordable. The average mortgage rate for a new borrower has fallen by 2.31% over the past five years from 5.88% in June 2008 to 3.57% in June 2013. The average house price has fallen by 13% over the same period. The typical rent paid, however, has increased by 13% (£88) since June 2010.

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