Monthly mortgage repayments are on course to outstrip rents for the first time in 14 years as the Bank of England's successive interest rate rises hit homeowners’ finances. The property market will be cooled by a near £200 jump in monthly interest costs over the next 18 months as first-time buyers decide to stick to renting, industry experts have warned. Average monthly mortgage payments stood at £817 at the end of 2021, with rents at £931 per month, according to Capital Economics. However, its economists expect mortgage repayments will surge above rents in the second quarter of 2022 as interest bills rise. At the start of next year, average mortgage repayments will be just above £1,000 compared to around £980 for rents, its forecasters predicted. It will be the first time mortgage repayments have outstripped rents since 2008 when the balance had flipped between owners and renters four years earlier. Since 1975, rents have been less costly than mortgages just a fifth of the time. Andrew Wishart, property economist at Capital Economics, said: "When the monthly cost of buying has eclipsed that of renting in the past it has signalled trouble ahead, with prospective first-time buyers choosing to rent rather than buy, helping to cool demand."
The Sunday Telegraph
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