17 November 2016
Home owning cheaper than renting
Some eye watering statistics from The Money Charity this week. The Charity has reported that total mortgage lending stood at £1.35 trillion at the end of September. This is up from £1.275 trillion in 2015. Averaged over the 11.1m households with a mortgage equates to £118,693 in September.
The average interest rate was 2.74% and according to The Council of Mortgage Lenders, the average for new loans was 2.27%. They also suggested that the average First Time Buyer deposit was 15% (£28k in July) and the average house price amounted to £184k (August) for first timers. Yet First Time Buyers borrowed on average just 3.45 times their income!
There were 40,533 loans approved for house purchase in September, according to the British Bankers Association, similar numbers to a year earlier. The average loan approved was circa £176k.
This is interesting as it is a common knowledge that owning a home can be cheaper than renting. The report goes on to suggest that inclusive of all benefits, private renters spent an average of 43% of their income on rental payments. In comparison, owner occupiers spent on average 19% of income.
And as we enter the run up to Christmas, it's also useful to note that the average interest rate on credit card lending in September was 18.49%, which is 18.24% above the Bank of England Base Rate of 0.25%! Remember, doesn't matter which type of credit you use to fund seasonal spends, at some point they all need to be repaid!
And finally, a number of lenders including Platform (Part of Co-op), Virgin Money, Nationwide, Coventry Building Society, Barclays, Halifax and TSB have all changed rates in the last ten days. The majority with rate cuts and attractive options for new customers including cash back for purchases and free valuation and free legals on remortgages. There are certainly some fantastic deals available in the current climates. So if you are thinking of reviewing your mortgage options, now might just be a good time to find that paperwork!