Utility bills set to reach one third of mortgage payment costs

According to new research by online brokerage service, Revolution Brokers, the energy price cap increase set to begin in October will total nearly a third of annual mortgage in energy and water bills. 

The analysis of utilities bills has changed since 2019 and what this cost equates to as a proportion of our annual mortgage payments shows a drastic adjustment in costs.

The annual mortgage payments are based on a three year fixed mortgage at a 75% loan to value. 

2019 costs vs 2022 costs

Revolution Brokers reveal 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%.

During this time the average household also paid £1,593 for energy and water each year, this meant that their yearly utility bills totalled 18.5% of their annual mortgage cost. 

In 2020, £1,452 was spent per year on utilities. This means that this cost accounted for 16.2% of the average annual mortgage repayment of £8,940. 

In 2021 this cost climbed to £1,689 per year, equating to 18.2% of the annual cost of a mortgage (£9,265).

Currently, the average homeowners is repaying £12,643 per year in mortgage costs and £2,390 per year in utilities, meaning that running a property now accounts for 18.9% of the average annual mortgage repayment. 

October of this year utility costs are set to climb to  £3,549. 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, commented: “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.”