More expensive mortgages ‘to raise household debt’

A recent study showing a fall in the cost of running a home is not a pointer to the future, because it is disproportionately influenced by low mortgag…

A recent study showing a fall in the cost of running a home is not a pointer to the future, because it is disproportionately influenced by low mortgage debt repayments, an expert has said.

Sainsbury’s Finance has found the average home costs £8,091 to run a year, a 13.6 per cent drop since 2008.

However, it is notable from the breakdown of costs provided that the most expensive cost – that of mortgages – has dipped by 27.67 per cent and Timothy Lambert, head of consulting at property agency Ducalian, said this is a “short term” bonus for householders.

“This [factor] vastly sways the figures but rates will rise over the course of the next few years as interest rates rise and cheaper products that run for a fixed period are coming to an end,” he noted.

“I very much doubt they will be the same in 12 months,” Mr Lambert concluded.

A rise in household costs through increased rates when the Bank of England does eventually hike them could have a major impact on some who are currently struggling to pay their debts.

For those in the tightest financial spots, this could lead to an increased threat of repossession.

Another factor that could be going into reverse is that of energy prices.

In the Sainsbury’s study, it was revealed gas costs were down 5.91 per cent since 2008 and electricity had dipped by 9.01 per cent.

However, the announcement last week by British Gas of a seven per cent price hike could spell the end of lower fuel prices and add to the cost burdens for struggling households.

By Joe White

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