"This cost is only going to grow"
With only energy bills increasing at a greater rate, the monthly cost of repaying a mortgage has seen the second largest annual spike among household costs, according to the latest research by Revolution Brokers.
To reveal which area is putting the most pressure on our household finances, it analysed the annual increase across a number of household costs, from energy bills to mortgage payments, water and sewage, and food and drink.
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%, or £694, per year.
While the initial cost of climbing the property 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 having increased by 19%, the second largest increase of all household outgoings.
Not only is the average mortgage repayment by far the largest financial commitment, homebuyers are 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.
It is food cost that has seen the third largest increase, with the average household now spending 10%, or £321, more per year on food and non-alcoholic drinks. Water and sewage has seen the smallest change, increasing by just 2% annually, an increase that equates to just £7 more per year, per household.
“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,” Almas Uddin, founding director at Revolution Brokers, commented. “Not only have they seen by far the most drastic increase, the intended energy cap increase due next month will 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 recently, this cost is only going to grow.”