Household running costs down 17%

The cost of running a home in the UK has plummeted to a three year low, according to new research from Halifax.

A study by the bank found that the cost of owning and running a household has fallen by nearly a fifth during the past twelve months to the lowest level since 2006.

Household running costs to the year ending 30 April 2009 were £7,298, down 17% on year, Halifax said.

This is 23% of the average UK salary, down from 28% a year ago.

The decrease was driven by low mortgage payments caused by the Bank of England slashing the base rate to a record low of 0.5%.

The Bank of England’s rate cut saw the average mortgage rate drop from 5.8% in April 2008 to 3.62% a year later, reducing mortgage interest payments by 47%.

However, mortgage payments were the only household running cost that fell during the year, with gas and electricity up 13%, and water bills up 5%.

Suren Thiru, Halifax economist, said the “sizeable drop” in household running costs will provide “welcome relief” to homeowners whose budgets have been squeezed elsewhere by the credit crunch.

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