The cost of owning and running a home has fallen by nearly a fifth during the past year to its lowest level since 2006. The average property cost £7,298 a year to run in the 12 months to April, 17 per cent less than during the previous year, according to high-street bank Halifax. The steep drop in running costs was driven by a 47 per cent fall in mortgage interest payments, as the Bank of England base rate was slashed to a record low of 0.5 per cent. As a result of the decline, the average mortgage rate dropped to 3.62 per cent, down from 5.8 per cent in April 2008, and interest payments fell to an average of £1,990 a year.

But mortgage payments were the only area of household running costs that fell in the 12 months, with gas and electricity charges rising by 13 per cent to an average of £1,409 a year. Routine maintenance costs also rose, rising by 7 per cent to £350 a year, while both water bills and the cost of repairing properties were 5 per cent higher in April than a year earlier.

Despite their fall, mortgage interest payments are still the single biggest cost of owning a home, accounting for 27 per cent of the total, although this is down from 43 per cent in April 2008.

Electricity and gas bills are the second biggest cost at 19 per cent, up from 14 per cent, followed by council tax and domestic rates at 17 per cent. Overall, the cost of owning and running a house takes up 23 per cent of earnings for someone on an average salary, down from 28 per cent in 2008.

Suren Thiru, economist at Halifax, said: ‘With mortgage interest payments declining by almost half over the past year, the annual cost associated with owning and running a home in the UK has fallen significantly. “Such a sizeable drop in the costs of running a home will help to ease the pressure on household disposable income, providing some relief to homeowners.”’

Questions 1 What might be the direct and indirect costs of running a home?
2 Should this cost information be used as a basis for planning to save for a family holiday?