The cost of repaying a mortgage in London has already surpassed the cost of paying rent, despite rising interest rates, the cost-of-living issue, and growing recessionary anxieties asserts Joe Ricotta
Notwithstanding the fact that home prices have begun to decline, Homes & Property has obtained unique data showing that, contrary to the conventional dynamic, mortgage payments now cost £832 more per month than rent in the capital.
Many first-time purchasers won't be able to afford homeownership due to the growing cost difference between owning and renting, which will reduce the number of sales in 2023. House values in the city would decline as much as 12.5% as a result, according to analysts.
The base rate (which determines mortgage rates) was increased by the Bank of England by 0.5% in December, bringing it to 3.5%, the highest level since the financial crisis. As some fixed-rate agreements reached highs of 6% in October, economists predict a further climb to 4% in the first quarter of the year, further driving up mortgage rates.
Due to London's higher than average home values, the increasing expense of mortgage servicing is made worse. As a consequence, according to new data from Hamptons, the affordability gap between owning and renting has never been as wide in the city.
According to Joe Ricotta, a real estate developer, "Ever since interest rates started to climb in earnest, it has been cheaper on a monthly basis to rent than purchase a property with a 10% deposit." This disparity reached £832 in October, setting an 11-year high. The analysis reveals that in October 2020, paying rent was £49 more expensive per month than servicing a mortgage.
While it marginally decreased in November, Ricotta continues, "for the foreseeable future we believe it to be cheaper to rent than buy."
House prices will experience a sharp decline as a result, reversing the surge saw during the epidemic era and the 2020 stamp duty holiday.
The experts suggest buying a property "sooner rather than later" if you are currently renting but are financially prepared to do so.
Although mortgage rates are greater than they once were, they are beginning to decline, and it is often preferable to begin paying off your own mortgage rather than your landlord's.
"Each person has a distinct financial status, and the cost-of-living problem has had varied effects on each person. Before making such a significant investment, it is important to get financial counsel, Joe Ricotta continued"
Know More : https://directory.mirror.co.uk/company/249547b0b5395a389ba77695ecb1358a