First-time buyers could save hundreds of pounds a year by buying rather than renting in some of the UK’s most affordable areas, according to analysis by Pepper Money.

The study of Office for National Statistics (ONS) data found the average first-time buyer property costs around £261,700, while the average monthly rent for a three-bedroom property is about £1,269. Of 187 locations analysed across England and Wales, 41% were found to be cheaper to buy than rent.

Middlesbrough topped Pepper Money’s first-time buyer index, scoring 82.4. The average property price there is £123,831, with estimated mortgage payments of £607 a month. Buyers could save around £157 a month compared with renting.

Burnley ranked second, with average house prices of £115,953 — the lowest of the areas analysed — and an estimated saving of £114 a month. Merthyr Tydfil came third, followed by Cumberland and County Durham.

The North East performed particularly strongly, with every area except Northumberland having a cheaper average mortgage than local rent. Average mortgage payments in the region were £699 a month, compared with a national average of £1,310, while average property prices were just under £143,000.

The North West also offered opportunities, with 69% of areas recording cheaper mortgages than rents. Manchester and Salford were notable examples: despite average house prices of £232,888 and £204,756 respectively, buyers could save more than £3,000 a year because of relatively high rents.

Southampton offered the largest potential saving among the top 10 locations, at £327 a month, or £3,924 a year.

Pepper Money’s index considered earnings, house prices, rent-to-mortgage costs, mortgage affordability and deposit accessibility. Mortgage costs were modelled using a 5.13% interest rate, a two-year fix, a 30-year term and a 10% deposit.

The findings suggest that, despite wider affordability pressures, prospective first-time buyers may find better value by looking beyond the UK’s most expensive housing markets.