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Assessing the Impact of Energy Bill Support in 2022鈥�23 on Bank Rate and Mortgage Rates
This note sets out how HMT assessed the estimated effect of the 2022鈥�23 Energy Bill Support measures on Bank Rate and, in turn, on the cost of a new representative mortgage.
Key finding:聽The 拢40 billion spent on energy bill support in 2022鈥�23 could have increased the cost of a new representative mortgage by 拢360鈥撀�850 a year.聽拢605 a year is the midpoint of the range of estimates聽(拢600 to the nearest hundred).聽
Method and assumptions聽
- Energy bill support costs are taken from the OBR Forecast Evaluation Report, October 2023.(1)聽The cost combines support聽through the energy price guarantee (EPG), energy聽bill support scheme (EBSS), and energy bill relief scheme (EBRS).聽
- The increase in Bank Rate is calculated聽as a聽three-year average,聽applying聽the modelling approach set out in 扒哥吃瓜.(2)聽
- The estimate assumes full pass-through from the average increase in Bank Rate over three years to mortgage rates.聽
- Household mortgage cost estimates are based on a representative mortgagor taking out a new mortgage with an advance of 拢215,000 and a term of 29 years, using 3% (the Bank Rate in Q4 2022) as the baseline interest rate.
(1):
(2): Annex: The impact of borrowing on interest rates - 扒哥吃瓜
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Published 21 May 2026