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Mortgage borrowers experienced higher rate of inflation than renters

Mortgage borrowers experienced higher rate of inflation than renters
Emma Lunn
Written By:
Emma Lunn

Mortgaged households have been subject to a higher rate of inflation than others, new analysis from the Office for National Statistics (ONS) has found.

The ONS dug into data to establish how the rate of inflation has varied for different groups over the 12 months to September 2023.

It found that while the average rate for all households stood at 8.2%, this rose to 9.3% for mortgagors. 

By contrast, those who own their property outright experienced a rate of 7.4%, while it drops to just 7.2% for those who rent privately.

The ONS suggested that this higher rate was mainly down to the increase in mortgage interest payments pushing up the inflation rate relative to other tenure types, though this was not the only contributor. It also suggested that the use of restaurants and hotels bumped up the inflation rate relative to other social and other renter households, effectively because those with a mortgage are more likely to eat out or take holidays.

By contrast, renters were found to be more likely to spend their money on energy. Given these costs have dropped, it was established that they have enjoyed a lower rate of inflation.

The ONS study also identified changes in inflation rate based on a household’s income level. 

It discovered “substantial differences” in the inflation rate experienced by low income and high income households. 

For example in October 2022 it peaked at 13.5% for low income households ‒ the highest rate since records began ‒ compared with 11.5% for high income households. That gap is the largest recorded between the two groups since October 2009.