Annual energy costs rise to over 15 weeks’ mortgage payments for first-time buyers

On average over the past month, first-time buyers were buying a house worth £283,154 with an average deposit of 23.75% and an average salary of £56,693 across both single and joint applicants.

For an average couple where one earns £30,000 and the other £26,683, this equates to take-home pay of £3,833.10.

According to Ofgem's figures, last year energy bills were on average £1,339 per small residence, but after the recent price cap announcement, bills will now rise to £3,549.

That means that for the average first-time buyer, annual energy costs will rise from 34.9% of one month’s take-home pay to 92.6%. This equates to over 15 weeks’ mortgage payments.

James Tucker, founder of Twenty7Tec, commented: “A working housing market needs a functioning first-time buyer 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.

“Last year, according to Ofgem, the average energy bill for a first-time buyer per household would have been £1,339. That was around one-third of one month’s take-home salary for first-time buyers. This year, the cap is rising to £3,549 and, according to our figures, now represents around 92.6% of one month’s take-home salary.

“The energy cap rise will eat into first-time buyers’ attempts to save for their housebuying deposits, and it will hit those who have already purchased houses.

“Today, an average firsr-time buyer 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 first-time buyer households to the tune of £2,110 per year compared to this time last year – equivalent to two whole months’ mortgage payments.”