Utility bills set to hit 28% of average mortgage

The latest market analysis by Revolution Brokers has revealed that October’s energy price cap increase will see the average household paying the equivalent of nearly a third of their annual mortgage in energy and water bills.

Revolution Brokers looked at how the cost of our utilities bills has changed since 2019 and what this cost equates to as a proportion of our annual mortgage payments, based on a three year fixed mortgage at a 75% loan to value.

The research shows that in 2019, the average homebuyer was paying £8,629 per year for a mortgage based on the average house price of £233,366 and an average mortgage rate of 1.73%.

With the average household also paying an annual total of £1,593 for energy and water, this meant that the cost of their yearly utility bill equated to 18.5% of their annual mortgage cost.

In 2020, while both the average house price and mortgage rate had both increased, the average yearly spend on utilities fell to £1,452 per year, meaning that this cost accounted for 16.2% of the average annual mortgage repayment of £8,940.

But the cost of powering our homes has been on the up ever since, climbing to £1,689 per year in 2021, equating to 18.2% of the annual cost of a mortgage (£9,265).

With the average homebuyer currently repaying £12,643 per year in mortgage costs and £2,390 per year in utilities, the rising cost of running our homes now accounts for 18.9% of the average annual mortgage repayment.

However, utility costs are set to climb to a huge £3,549 in October of this year. Based on the current cost of repaying a mortgage, this would see annual energy and water costs increase to the equivalent of 28.1% of the annual cost of a mortgage.

Founding Director of Revolution Brokers, Almas Uddin said, “The current cost of living crisis is a very real concern for many households and it’s easy to see why when energy bills are increasing at such an extraordinary pace.

“Climbing the property ladder is a hard task and our monthly mortgage payments are by far the most substantial of our household outgoings.

“So for the average household to be paying the equivalent of almost a third of this cost in utility bills by October, really does highlight the bleak outlook for many and just how out of control the current situation is.”