The latest research by Revolution Brokers analysed the annual increase in a number of household costs, from energy bills to mortgage payments, water and sewage and food and drink, to reveal which area is putting the most pressure on our household finances.
The research shows that the soaring price of energy continues to put the greatest strain on UK households. In 2021, the average household was paying an annual bill of £1,277, but this has since climbed to £1,971, an increase of 54% (£694 per year).
While the initial cost of climbing the ladder via a 15% mortgage deposit has increased by just 8% year on year, the financial commitment of borrowing to buy a property has seen the second largest increase.
A year ago, the average buyer purchasing with a standard variable rate mortgage with an 85% loan to value was paying £13,921 per year. With interest rates climbing since December 2021, this annual cost now sits at £16,629 per year and has increased by 19%, the second largest increase of all household outgoings.
Not only is the average mortgage repayment by far the largest financial commitment, but homebuyers are also now paying £2,709 a year more than they were in 2021.
In contrast, those living within the rental sector have seen the annual cost of renting increase by just 9%, up from £12,636 per year to £13,716.
But it’s our food shop that has seen the third largest increase, with the average household now spending 10% (£321) more per year on food and non-alcoholic drinks.
Water and sewage have seen the smallest change, increasing by just 2% annually, an increase that equates to just £7 more per year, per household.
Almas Uddin, Founding Director of Revolution Brokers said, “Much of the focus around the current cost of living crisis has been on the soaring cost of our energy bills, and for good reason. Not only have they seen by far the most drastic increase, but the intended energy cap increase due next month will also see this cost climb even higher.
“However, it’s our mortgage commitment that remains by far the most substantial household outgoing and this cost has also been increasing since the first base rate hike back in December of last year.
“While it may have increased at a lower rate in percentage terms, this equates to a sizeable jump in pounds and pence and with the Bank of England announcing another notable interest rate increase last week, this cost is only going to grow.”