Many homes are now cheaper to buy with a mortgage than to rent

February is on track to record the highest number of new home listings in a decade, according to Zoopla’s latest House Price Index.

Combined with falling mortgage rates, the market is currently looking particularly good for first-time buyers, with 40 per cent of homes for sale now cheaper to buy with a mortgage than rent.

Reflecting improved confidence and a strong desire for many households to move, this month is on track to record the highest number of new listings in February for a decade.

Currently, there are six per cent more homes for sale than a year ago – something Zoopla expects to rise further in the coming months.

Not only will this increase choice for buyers, but it will help to keep price increases in check over the remainder of the year.

Average mortgage rates for new loans are at their lowest level for four years. This is thanks to lower base rates and stronger competition between lenders.

In real terms, this means that rates on both two-year and five-year fixed deals are now below four per cent for the first time since 2022.

As such, buyers currently have access to some of the best deals seen for several years, particularly those with larger deposits, and this is supporting increased sales activity.

Criteria in terms of how mortgage lenders assess affordability have eased over the past year.

Today, lenders are typically checking that borrowers can afford a higher mortgage rate of 6.5 per cent, which is lower than at 8.5 per cent a year ago.

This means that 40 per cent of homes currently for sale on Zoopla are cheaper to buy with a mortgage than the cost of renting locally – assuming a 20 per cent deposit.

This is a big improvement from 25 per cent last year, showing that home ownership has become more affordable than in recent years.

Despite the increase in market activity, house price growth remains subdued at 1.3 per cent growth (12 months to January) compared to a year ago.

This is versus 1.8 per cent the previous year.

Northern Ireland is registering the fastest rate of price growth at eight per cent and across Great Britain, the North West is the strongest-performing region, with prices up 3.3 per cent year-on-year, followed by Scotland (2.8 per cent) and the North East (2.5 per cent).

In contrast, average prices in London are 0.2 per cent lower than a year ago.

The areas with higher price growth are more affordable and have fewer homes for sale than a year ago, limiting buyer choice and supporting price growth.

Richard Donnell, executive director at Zoopla, says: “Despite improved levels of market activity, subdued house price inflation is good news for buyers and sellers and represents a more stable market. More sellers putting their homes on the market shows a strong desire to move home.

“Lower mortgage rates and improved affordability of mortgage means now could very well be the best time to buy a home in recent years, especially for first-time buyers with more homes available to buy for less than the cost of renting.

“We expect continued modest rates of price inflation over 2026, which will support healthy levels of sales with some wide variations across local markets.

“Sellers need to seek the advice of local agents to get the right strategy for their home.”