New research by Bank of Scotland suggests that the cost associated with buying a home in Scotland is now lower than renting a property.
The average monthly costs associated with buying a three-bed house in Scotland stood at £514 in March 2011, 3% (£17) lower than the average monthly rent paid on the same property type of £531.
In contrast, in 2008 the average cost of buying was 59% more than the typical rent paid.
Across the UK, average buying costs are currently 14% lower than the cost of renting.
Bank of Scotland says the fall in the monthly cost associated with buying compared to renting has been driven by the decline in the average mortgage rate since 2008. The mortgage rate for a new borrower has fallen to an average of 3.59% from 5.82% in March 2008, helping to reduce the average monthly mortgage payment by 38%.
Buying costs currently account for a slightly smaller proportion of average Scottish disposable income (27%) than rental payments (28%). In 2008, buying costs accounted for a greater proportion of average disposable income than rent (51% against 32%).
Despite the tightening of criteria, the average deposit paid as a percentage of the purchase price has been broadly stable since early in 2009 at around 27%, following a marked rise in 2008.
Transaction costs including stamp duty and the fees associated with home purchase also add to the overall costs of buying a property. The average stamp duty bill for a three bedroom house was £1,385 in March 2011 (although first-time buyers are exempt on purchases below £250,000) 17% (£288) lower than the average in March 2008.
Suren Thiru, housing economist at Bank of Scotland, said: “With the typical monthly mortgage payment declining by over a third since 2008 as a consequence of falling mortgage rates and lower house prices
