Following the news that Ofgem is lowering its energy price cap from £3,280 per year to £2,074 for the average household in England, Wales and Scotland, from 1 July, experts in energy, money and mortgage have had their say.
Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial:
“The impact of lower energy prices is the driving force of lowering inflation around the world. Raw costs have been falling for months and they are finally finding their way into consumers’ bills. This will mean the ‘trickle-down’ effect of inflation on everything else, like food prices currently, will also subside over time.
“The central banks should see this as an important sign to pivot on rate policy. Of course, this will affect affordability for mortgage loans and lenders will adapt over the next couple of months. This could well be a sign things will return to normal but it’s only the start of the beginning.”
Kirsty Kenney, co-founder of household energy efficiency specialists, Kuppa:
“It’s important for consumers to remember that energy bills won’t be ‘capped’ at £2,074. The actual cap is on the amount you can pay per unit of energy that you consume at home and the amount you pay each day to access that energy. The more energy you use, the more it will cost you.
“The headline figure misses the fact that, for most people, their bills will still be 80% higher than they were two years ago. Increasing your home’s energy efficiency helps protect you from these high costs. Fix the roof while the sun shines.”
Ross Lacey, director at Rayleigh-based Fairview Financial Management:
“Any decrease in the price we pay for energy will help, but with other bills like food still increasing, this doesn’t suddenly take the pressure off households. They are still under phenomenal pressure. This should be factored into lenders’ affordability models, but with other household costs still increasing, we don’t see the reduction in the energy price cap making a signification difference to mortgage affordability on its own.”
Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com:
“Lower energy prices will provide welcome relief to household budgets across the country. But the impact on mortgage affordability will be negligible. Food prices are still soaring and economists are now predicting the Bank of England base rate could rise to 5.5% by November. So if anything, affordability is likely to tighten further.”
Jonathan Burridge, founding adviser at hybrid mortgage adviser, We Are Money:
“Let us remember that prices shoot up, like a rocket, and then fall back down like a feather. I doubt that we will see energy companies rush to reduce their tariffs. Yes, we will see reductions, but they will be slow and we are unlikely to return to the levels we saw pre-pandemic.”