ALTHOUGH buying a home is cheaper than renting in most parts of the country, some existing owners might still be tempted to sell up and live partly off the capital which is released, says a new analysis.

According to Halifax, lower house prices and rock bottom interest rates ensured that the average monthly costs associated with buying a three-bedroom house in March was £608.

That’s £98 lower than the average monthly rent paid on the same property type of £706.

Three years ago, the average cost of buying was 43 per cent more than the typical rent paid on the same property.

The significant fall in the monthly cost associated with buying compared to renting has been driven by the decline in the average mortgage rate over the last three years.

The mortgage rate for a new borrower has fallen to an average 3.59 per cent, against 5.82 per cent in March 2008, cutting monthly mortgage payments by 39 per cent.

Buying costs currently also account for a smaller proportion of average disposable income than rental payments.

Despite the improvement in the affordability of buying relative to renting, however, many potential buyers have failed to buy in the past three years.

And that’s because of tighter lending rules by the banks and building societies.