Household bills could rise by £380 this year – here’s how to cut your energy, insurance and mortgage costs
With household bills rising by 9.7 per cent last year, 2017 could see a similar trend. Here's how to beat the price hikes
HOUSEHOLD bills rose by an average of almost £200 last year, 9.7 per cent higher than they were in 2015.
That means that the average home now pays £2,223 on energy, motor and home insurance bills, according to new analysis.
Comparison site Comparethemarket.com said that while bills dropped by £180 in 2015, they rose again last year. And 2017 could see bills rise further.
Simon McCulloch, director at Comparethemarket.com said that 2017 could see "a perfect storm for household finances."
That's because car insurance, energy, mortgage and even water costs could all rise this year. We've crunched the numbers and found that this could add up to as much as £380 this year.
Of course, this is just an estimation - your bill may not rise or they could go up by even bigger numbers.
Below, we look at what bills are likely to rise, and what you can do to combat costs.
Car insurance costs are rising
According to Comparethemarket.com, the winter months historically see a rise in motor premiums, while prices typically fall in January and February.
This means that the start of this year will be crucial in helping predict whether recent rises in the cost of motor insurance will keep spiralling in 2017.
Comparethemarket.com predicts that there could be a rise in insurance costs more generally this coming year, due to the increase in Insurance Premium Tax (IPT) which has now been increased three times by the Treasury since 2014, doubling the tax from six per cent to its new rate of 12 per cent from June 2017.
"As a direct result of these measures, our analysis suggests that drivers alone will have to pay £109 more for their insurance than they did two years ago," Simon said.
How to keep insurance costs low
Shop around for better deals. Check comparison websites, such as , , and .
Make sure to also check the big insurers who don’t appear on these sites, including Direct Line, Aviva and Zurich, to see how their offers compare.
Paying for your car insurance in one go may seem like a huge wodge of money – but it will save you cash in the long run.
By paying for it in monthly instalments, you are essentially taking out a loan from your insurer, with interest.
If you can afford to pay the annual amount in one go then you could save up to 20 per cent.
Rising wholesale gas and electricity costs will push up energy bills
Wholesale energy prices are expected to rise this year, which could see energy bills creep up.
Mark Todd from Energy Helpline predicts that energy prices could go up by around five per cent in 2017.
With the average UK household spending £1,066 on their annual energy bill, this would mean an additional £53 a year.
How to keep energy costs low
With two-thirds of UK households on their energy supplier's standard tariff, homeowners could quickly save by switching to a cheaper deal.
In fact, a Sun investigation last month found that seven in ten families were on the priciest tariffs – paying up to £389 a year more than people on their firm’s cheapest deal.
Ofgem, the energy regulator, has launched a new league table which shows how much people can save by switching to their supplier's cheapest deal, or by switching supplier entirely.
Other ways to cut your energy bills
According to the Energy Saving Trust, these six simple household tips could save homeowners hundreds on their energy bills:
- Draught-proof your home: potential saving of £35 a year
- Insulate your pipes: potential saving of £10 a year
- Upgrade heating controls: potential saving of £75 to £155 a year
- Top up hot-water cylinder insulation: potential saving of £25 to £35 a year
- Top up loft insulation: potential saving of £15 a year
- Insulate your walls: potential saving of £155 to £260 a year
Homeowners or renters in receipt of benefits can get help towards the cost of fitting insulation or a new boiler. Under new regulations, tenants who are receiving certain benefits can access a grant to pay for some energy improvements – and landlords have to agree to the installation.
Mortgage rates are low - will costs rise?
Mortgage borrowers arguably never had it as good as they did in 2016, when interest rates fell to new record lows. But the question is, can that last in 2017?
Since the Base Rate fell to 0.25 per cent in August, there have been suggestions that the next move in Base Rate could be upward and not a further cut.
This is because there has been more positive than expected economic data, and inflation is forecast to rise dramatically this year.
An increase in Base Rate would have a direct bearing on mortgage costs for those with variable rates.
David Hollingworth, of broker London & Country Mortgages, said that Base Rate doesn't even have to move to have an impact on mortgage rates.
"Market expectation that Base Rate could rise sooner than previously anticipated has pushed up the cost of funds for lenders and fixed rates have already started to drift up.
"That initially affected the longer term fixed rates but has since seen other deals push up."
For example, the lowest two-year fixed rate mortgage rate at the beginning of December was a record low of 0.99 per cent. The lowest two-year fixed rate currently on offer is from Norwich & Peterborough BS at 1.19 per cent.
On a £200,000 mortgage, this amounts to £18 more in monthly mortgage repayments, or £216 a year.
Mr Hollingworth said: "It's certainly not a cause for panic and mortgage rates remain spectacularly low, but it does indicate that a turning point may have been reached and borrowers can't assume rates will keep on falling.
"With other bills rising as higher inflation takes hold, reviewing the mortgage could be an ideal way to cut costs and bring some certainty to what will be most people's single biggest outgoing. "
How to keep mortgage costs low
While there's little you can do if interest rates rise and mortgage rates follow, if you're really struggling with higher monthly repayments you can try and ask your lender if you can reduce your monthly interest payments, or change to interest-only payments.
Water bills - could you save by switching to a meter?
The average household water and sewerage bill in England and Wales increased by £2 for the period February 2016 to 2017.
Water UK, which announces the price change each year based on forecast data provided by water companies, is set to release information on 2017-18 water prices next month.
There has been no indication that prices are likely to rise significantly.
How to keep water costs low
Depending on your household and your water consumption, it could be worthwhile switching to a water meter if you're on a fixed price each year, or vice versa.
As a general rule, if you've got more rooms in your house than people then it might be worth trying a meter.
If you're on a water meter, reduce the amount of water you're using by turning taps off when you're brushing your teeth, have showers rather than baths, and use a basin in the sink when you're washing up, rather than keeping the tap running.
Food costs are rising but are grocery bills?
Competition between supermarkets means that the cost of our weekly shop is cheaper than it was a year ago, but economists say food ingredients could rise as a result of rising inflation.
Wholesalers begun increasing prices last year, blaming the weakened pound following the Brexit vote on cutting profits.
Unilever, for example, is increasing Pot Noodles from £1.09 to £1.19 and Hellmann’s Mayonnaise from £1.99 to £2.19.
Walkers, which is owned by PepsiCo, is understood to be seeking price rises of between five and ten per cent, as a result of fluctuating foreign exchange rates, supply pressure on key ingredients and the weakened value of the pound.
Overall, however, it's likely that falling prices will continue this year as a result of competitive price wars between retailers.
How to keep food costs low
To ensure your weekly supermarket shop is as cheap as possible, make sure you're shopping at the cheapest supermarkets.
There are sites available online - such as - that allow you to compare prices of everyday items across UK supermarkets.
Prices change all the time, so you’ll need to keep checking back on your favourite comparison site to make sure you’re still getting the best deal.
Other ways to cut food costs include buying own-branded goods and using coupons and discount codes.
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