Buying a home is cheaper than renting in most UK cities outside London, according to research from Lloyds Bank.
The study compared average monthly rent with mortgage payments for first-time buyers (FTBs) putting down a 5% deposit.
In nine out of 11 major cities, owning worked out cheaper than renting.
Typical FTB mortgage payments were 17% lower than average rents.
The average 5% deposit needed was £11,412 based on a property price of £228,233.
The research used a 4.78% interest rate fixed for five years and a 30-year repayment term.
Glasgow showed the biggest saving, with mortgage payments 32% below rent – a difference of £396 a month or £4,752 a year.
The average FTB property in Glasgow was £172,000, so a £8,600 deposit was enough to get started.
Newcastle followed, with buyers saving £217 a month compared to renting.
Nottingham buyers saved £86 a month.
In Bristol, buyers could build up almost £25,000 in extra equity over five years.
Even after factoring in the deposit, the long-term gains from equity and lower payments made buyers better off in most cities, according to research.
Amanda Bryden, head of mortgages at Lloyds, said: “We know that saving for a deposit is one of the biggest hurdles for first-time buyers.
“With rents having risen sharply over the last two years, many are already managing monthly payments that are higher than a typical mortgage.
“That’s why low-deposit mortgages could be the right solution for many – helping people move from renting to owning sooner than they thought possible.
“It’s also important to consider other upfront costs like legal fees and moving expenses – but for most, the long-term savings will outweigh these.”
The study also found that after five years, a buyer with a 5% deposit could reduce their loan-to-value (LTV) ratio from 95% to 87% even if house prices stayed the same.
This helped build more equity and improved access to future mortgage deals.
Adding up the savings on mortgage payments and equity, a typical buyer was around £32,000 better off after five years, or £20,500 after the deposit was taken off.
Glasgow topped the list with five-year savings and extra equity totalling £37,578 before the deposit.
In Bristol, the total was £38,845.
In cities like Cardiff and Sheffield, renting was slightly cheaper month-to-month, but the long-term benefit of equity made buying a better deal.
Bryden added: “There’s no doubt it’s a challenging landscape for first-time buyers, with both property prices and interest rates higher than they were just a few years ago.
“But buying a home remains one of the best long-term financial decisions most people will ever make.
“It’s not just cheaper than renting in the short-term, as the impact of growing equity in your own home – money that would otherwise have been lost in rent – means a more secure financial future.”
She said: “For anyone thinking about buying, speaking to a mortgage adviser or broker is a great first step.
“They can help you understand what’s affordable based on your budget and guide you through all the options.”
Mary-Lou Press, President of NAEA Propertymark, said: “While low-deposit mortgage products are helping more first-time buyers access the property market, many still face significant upfront financial hurdles.
“Recent changes to Stamp Duty in England and Northern Ireland mean that some first-time buyers will also now have additional tax to pay.
“Beyond the deposit and any relevant property tax, buyers must also budget for solicitor fees, mortgage arrangement charges, valuation and survey costs, local authority searches, moving expenses, and insurances.”
Press added: “In many cases, these additional costs can amount to several thousand pounds, making the initial outlay far higher than just the deposit alone.
“That said, in some areas, we are seeing that monthly mortgage repayments can still be lower than local rents, especially for buyers securing competitive rates. But affordability must be assessed holistically.
“First-time buyers need to go in with a clear understanding of both the upfront and ongoing costs of ownership to make an informed decision.”
