Annual energy bills for first-time buyers have jumped almost threefold compared to one month’s take-home pay from a year ago eating into their ability to save for a deposit, according to Twenty7tec.
The mortgage platform says that this year, annual energy costs amount to 92.6% of one month’s FTB average take-home pay, compared to last year when these costs constituted 34.9% of a month’s take-home pay.
Last year, annual energy costs constituted around six weeks of average FTB mortgage payments, but this year amount to over 15 weeks of home loan payments.
The energy cap will rise to £3,549 per small residence following an announcement by regulator Ofgem last week. Last year, energy bills were on average £1,339 for the same type of property.
The fintech firm points out that FTBs bought houses that were worth on average £283,154 over the past month securing a five-year fixed mortgage at 3.4%.
It adds that FTBs had an average combined salary of £56,693 last month, for both single and joint applications, which for a single person equates to take-home pay of £3,448.
For a couple where one earns £30,000 and the other £26,683, this equates to take-home pay of £3,833.10, around which the firm has based its calculations.
Twenty7tec founder James Tucker says: “A working housing market needs a functioning FTB market. Together with the active buy-to-let market, it allows the rest of the property chain to keep moving smoothly. The energy price cap just announced will dramatically affect those looking to take their first step on the property ladder.
“The energy cap rise will eat into FTB attempts to save for their housebuying deposits, and it will hit those who have already purchased houses.
“Today, an average FTB will be buying a home worth £283,154, with a deposit of 23.75%. They’ll be going for a 28-year mortgage and, at the best rate available for them in the market, will be paying £1,004.03 per month for a repayment mortgage.
“So the new energy cap increase is going to hit FTB households to the tune of £2,110 per year compared to this time last year – equivalent to two whole months’ mortgage payments.”
