US households with mortgages have experienced higher cost savings relative to rents in at least two decades, according to analysis by Deutsche Bank AG.
There is a significant difference between rents and after-tax mortgage payments in proportion to the disposable income, based on data compiled by Deutsche Bank from the National Association of Realtors and REIS Inc. information service. The data featured Q4 numbers from 2002 to 2011 and annual figures prior to that.
Home loans cost 0.8 percentage point less in Q4 2011 after being almost equal to rents in the first three quarters. On average, mortgage payments have been 3.1 percent higher than rentals since 1991, noted John Perry and Nishu Sood, analysts at Deutsche Bank AG.
Analysts revealed that “falling home prices and still-rising rents” accounted for the Q4 gap. The median price of a single-family home dropped 5.8 percent in the quarter, while rent payments grew 0.5 percent on average.
On average, rents were 14.9 percent higher than home-loan payments in Q4 2011. The difference widened from Q3 by 8.1 points, and rentals were higher for the fifth consecutive quarter, noted analysts.
The gap between the cost of mortgages and rentals points to a rebound in homebuilding and a slowdown in rent increases, they added.
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