What we can all do NOW to cut THOUSANDS off €6k in bill hikes
Massive State support is needed to deal with the crippling – and seemingly unending – food, mortgage and energy costs coming down the tracks… but, with a little effort, there is plenty we can do to reduce all three
How on earth are we going to pay the staggering €6,500 in extra bills that are set to smash our household budgets apart this year? That’s what families will be asking themselves after another series of hikes in food, mortgages and energy hit this week – with a lot more financial pain to come. Our experts have totted up total increases of €6,500 coming down the tracks on all three fronts unless energy prices are capped.
Mortgage-holders were whacked with an unprecedented 0.75% official interest rate hike on Thursday.
‘By 2023, the total increase for the average Irish mortgage will be over €160 a month,’ says Mark Coan of Moneysherpa.ie
That would tot up to €1,920 a year.
Energy bills went up again this week with Energia hitting customers with 33% and 47% hikes in unit prices of electricity and gas respectively.
This is just the latest in an ongoing series of now well over 50 hikes since 2021 – and it will not be the last.
Average energy bills could hit €6,000 – three times what they were at the start of 2021 – warns Daragh Cassidy of Bonkers.ie
‘The situation is quite fluid and things have changed since July – but before Truss [UK prime minister] capped prices at £2,500, the UK price cap was forecast to go to over £5,000 in January or over €6,000 [in our money],’ he tells us.
‘We get over 70% of our gas via the UK so it’s a good proxy for us. Indeed UK gas and electricity has traditionally been slightly cheaper than ours. So that’s what we’re looking at.’
Adding to this pressure are soaring grocery bills.
‘Grocery inflation hit 9.5%, the highest level seen since July 2008, when we first started tracking the data,’ David Berry of grocery price experts Kantar warned in its latest bulletin.
‘Everyday essentials such as butter, milk, flour, eggs and bread are seeing some of the biggest price rises. This rise means that the average annual shop could rise by a staggering €662 if consumers buy the same products as they did last year.’
These savage hits to our incomes are simply unsustainable without some kind of Government support that goes way beyond the €200 energy ‘rebate’ proposed this summer. Households are going to need – and probably get – a payout from the State that goes into four figures.
But there’s no point in standing idly by waiting for a handout that in any case is unlikely to go far enough. There are plenty of things we can do to at least greatly alleviate the pain.
For starters, fix or switch your mortgage. Incredibly, months after the first ECB increase, there is still time.
Our table (opposite) shows the cheapest rates as they stood on Thursday afternoon following the ECB rare hike.
Some fixed rates have edged up, says Mark Coan. ‘And Avant Money also increased their variable rate by around 0.5% last month, and ICS have already announced an increase of 1.25% for October.’
Yet, ‘while passing the increases onto their tracker customers, other lenders held fire on their variable rates’.
He warns that this week’s hike could be added soon.
‘With the latest hike these lenders are likely to pass on 0.75% at least next month to their variable rate customers.
‘They may even pass on the previous hike at the same time leading to rises of 1.25%.’
Then what? ‘We will see another 0.5% going onto the current rates in the near term which are also likely to be passed on by lenders,’ Mr Coan adds.
Amazingly, there is still the option to fix at a low rate.
Switch from a 4.5% variable rate to one of just over 2% and you would save €243 a month – more than the looming increases.
‘Unlike energy price increases, most people can avoid these hikes if they act now,’ Mr Coan says.
Even if you’re already fixed short term, you should consider refixing.
‘I’d urge anyone with a fixed mortgage to check their break fees with their lender as soon as possible. They should then talk to a mortgage broker about switching lender to get a low-rate, medium-term fixedrate deal as soon as they can.’
‘If people take action now almost all can avoid their repayments going up by re-fixing.’
‘As non-bank lender fixed rates (such as Finance Ireland and Avant Money) are up to 1% cheaper across the whole mortgage term than the pillar banks, we are advising people to switch lender rather than re-fix if they can, to get the lowest repayments.’
Avant Money’s five-year fixed rate is €17,387 cheaper than Bank of Ireland’s five-year fixed rate over the full term.
Bonkers advises switching energy provider to save another €1,503 if you are out of contract.
That’s the highest average savings it has ever advertised simply because energy bills are now so ridiculously high.
You could save almost the same again by taking all of a very wide range of energy-saving measures, such as solar panels.
‘A typical system on a south-facing roof could potentially deliver savings in excess of €400 per year. For heat pumps typical annual savings are approximately €450,’ says a spokeswoman for the Sustainable Energy Authority of Ireland.
Grants for these measures and
others, such as home or attic insulation, have doubled – and trebled in some cases – recently. As for food bills, we waste €700 worth of food alone per family.
The SEAI, MABs and Energia have tips on saving money on grocery bills. Moneysherpa.ie has built an interest-rate calculator for people to work out what the rate hikes will mean for them.
Its data, quoted here, is based on an average mortgage of €200,000 over 15 years.