New research from Lloyds Bank suggests that in most major UK cities outside London, buying a home with a low-deposit mortgage can be more affordable than renting on a monthly basis.
The analysis compared average monthly rents with typical mortgage payments for first-time buyers across 11 cities. In nine of those cities, mortgage payments were found to be lower than rental costs, assuming a 5% deposit.
The calculations are based on average first-time buyer property prices in each city, using a mortgage with a 4.78% fixed interest rate over five years and a 30-year repayment term.
With 67% of first-time buyers citing deposit saving as the biggest barrier to homeownership, the research highlights how a relatively small deposit may still make buying viable in many locations.
A separate Lloyds survey found that 45% of prospective first-time buyers who have started saving already have at least £10,000 put aside—enough for a 5% deposit in some areas.
While buying may offer lower monthly costs in many cases, it is not suitable for everyone. Factors such as job mobility, lifestyle preferences, and the need for flexibility mean renting remains a better fit for some.
Where can first-time buyers save?
Glasgow leads the way, with mortgage payments around 32% cheaper than rent – saving buyers £396 a month, or £4,752 a year. With an average first-time buyer property price of £172,000 a deposit of just £8,600 could be enough to get on the ladder.
Newcastle ranks second for savings, with first-time buyers paying 20% less on average for a mortgage than they would in rent. That’s a monthly saving of £217, or £2,604 a year. With an average first-time buyer property price of £180,000, a deposit of just £9,000 might be enough to get started.
Nottingham is a little further down the list, while still offering savings for first-time buyers. Owning a first property in the East Midlands city could save buyers £86 a month, or £1,032 each year, compared to renting. With the average first-time buyer property priced at £183,000, a 5% deposit of £9,150 would be needed.
| City | Average first-time buyer price | 5% deposit amount | Monthly mortgage cost | Monthly rent cost | Mortgage vs rent saving | Monthly saving | Annual saving |
| Glasgow | £172,000 | £8,600 | £855 | £1,251 | 31.7% | £396 | £4,752 |
| Newcastle | £180,000 | £9,000 | £895 | £1,112 | 19.5% | £217 | £2,604 |
| Edinburgh | £243,000 | £12,150 | £1,208 | £1,392 | 13.2% | £184 | £2,208 |
| Bristol | £311,000 | £15,550 | £1,547 | £1,778 | 13.0% | £231 | £2,772 |
| Manchester | £234,000 | £11,700 | £1,164 | £1,317 | 11.6% | £153 | £1,836 |
| Nottingham | £183,000 | £9,150 | £910 | £996 | 8.6% | £86 | £1,032 |
| Leeds | £209,000 | £10,450 | £1,039 | £1,098 | 5.4% | £59 | £708 |
| Liverpool | £167,000 | £8,350 | £830 | £864 | 3.9% | £34 | £408 |
| Birmingham | £208,000 | £10,400 | £1,034 | £1,068 | 3.2% | £34 | £408 |
| Cardiff | £231,000 | £11,550 | £1,149 | £1,138 | -1.0% | -£11 | -£132 |
| Sheffield | £190,000 | £9,500 | £945 | £893 | -5.8% | -£52 | -£624 |
| GB average | £228,233 | £11,412 | £1,135 | £1,360 | 16.5% | £225 | £2,700 |
Amanda Bryden, head of mortgages at Lloyds, commented: “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.”
Comments are closed.