Stubborn mortgage rates and runaway rents continue to clobber working families, according to the latest Household Costs Indices for UK household groups: April to June 2024, published by the Office for National Statistics (ONS).
It revealed that:
- In the year to June, overall household costs were up 2.5%.
- Those with mortgages faced inflation of 3.7%, compared to outright owners at 1.3%.
- Private renters saw overall price rises of 3.2%.
- Parents faced an inflation rate of 2.9% compared to 2.3% for non-parents.
- Pensioners have a lower rate of inflation (1.2%) than non-retired households (2.9%), which is most likely due to more of them being outright homeowners.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Lurking underneath the headline figures of easing inflation is mortgage misery and ruinous rent hikes that mean some households face inflation rates as high as 3.7%.
“The overall figure looks increasingly positive, with the Household Costs Index [HCI] rising just 2.5% in the past 12 months. It’s a significant easing from 4.5% in March, and a world away from 9.8% a year earlier.
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“The impact of higher mortgage rates is feeding through into people’s pockets, as more of them remortgage. The picture is bleak. Those with mortgages face a far higher inflation rate than those without. And those with bigger mortgages are suffering even more horrible jumps in monthly payments, which is why higher earners and parents face horrible price inflation.”
Hargreaves Lansdown found that those who have remortgaged onto a higher rate between the end of 2022 and the middle of 2024 have an average of just £315 left at the end of the month – £95 less than those who are yet to remortgage.
Renters squeezed
“Renters don’t escape the pain,” added Coles, “because soaring rents stretched renters horribly and because they tend to be on lower incomes, those rents absorb a disproportionally large portion of their income, so the impact is felt even more keenly.
“In many cases, their finances were already on a knife edge, so inflation of 3.2% will be particularly painful.”
