Record low interest rates in the UK mean that homeowners are actually better off than before – in one sense. The average homeowner with a mortgage now has more left over after paying the bills due to the low interest rates and some lower costs for other household expenses, according to the consulting firm Ernst and Young.
The firm noted that average mortgage repayments had fell by 20pc during the last year to £553.59, leaving £1,075 each month after all expenses. In addition to the falling mortgage costs, gas and electricity prices have fallen from their 2008 peak, though they are still higher than they were five years ago. Petrol has fallen for the average house by 5pc as well.
Ernst and Young director Jason Gordon notes that “Even though we’re still in recession, many UK householders who have not been hit by unemployment have experienced a dramatic upturn in their monthly budgets over the last year.”
“However, the figures clearly do not tell the full story. Although a typical consumer with a mortgage may now have more money to spend on a monthly basis, the sharp house price declines of the last 12 months have significantly eroded their overall wealth.”
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