Cushman-Wakefield-Q4-2022-BTR-Report

FEWER FIRST TIME BUYERS IN 2023

REGIONAL RENT VS MORTGAGE MONTHLY PAYMENTS

REGIONAL VARIATIONS

£1,000 £1,200 £1,400 £1,600 £1,800 £2,000 £2,200 £2,400

-10% -12% -14% -17% -19% -21% -24% -26%

There are regional variations in the discount renters are currently achieving . Using the same parameters as the previous page , renters in the East of England have the greatest discount , at 25%. Meanwhile , in the North West , it remains cheaper to make monthly mortgage payments , with average monthly rent 2% more expensive .

0 £200 £400 £600 £800

2% 0% -3% -5% -7%

CAPITAL VS INTEREST

East of Engla …

West Midlands …

Yorkshire and …

South East

North East

South West

North West

As mortgage rates have risen over the past year , the balance between capital repayments and interest payments has shifted . Using the same parameters as before , average mortgage payments in February 2020 would have meant £297 pcm paid on interest and £436 pcm towards the capital ( average over the first year ); clearly an attractive proposition for owners . However , this has changed substantially , with £938 required towards interest and only £359 required towards the capital repayment .

London

East Midlands

Mortgage ( LHS )

Rent ( LHS )

Difference ( RHS )

CAPITAL VS INTEREST

FEBRUARY 2020

DECEMBER 2022

GREATER DEMAND FOR THE PRIVATE RENTED SECTOR

Capital £359

Interest £297

It is important to note that this is likely to be a short ( to medium ) term situation ; mortgage rates won ’ t always be at c .5%, with interest rates forecast to peak towards the end of 2023. There are also other f nancial bene f ts to owning a home , such as capital growth . However , there are also added bene f ts to renting , particularly the f exibility it o f ers , especially in times of economic hardship . With low consumer con f dence , uncertainty in the sales market , and rising monthly mortgage payments ( of which the majority is interest ), we expect f rst time buyers to be much more cautious about buying , if not deterred altogether in the near term . This is likely to create more demand in the private rented sector .

Capital £436

Interest £938

Source: Cushman & Wakefield, Bank of England, UK HPI, ONS, Homelet Rental Index

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