Mortgage blog: Why a rate rise may propel the government to victory in 2015
Since the base rate reached its record low of 0.5% in 2009 the government has been keen to keep rates low. Rate rises will hit millions of mortgage borrowers and, with a General Election due in 2015, the government have been keen to keep voters on side.
Now, though, a new poll has found that a base rate rise may actually help the government's chances, rather than hindering them. Keep reading to find out why.
Base rate set to rise in 2014?
Over recent weeks there has been speculation that the Bank of England will increase the base rate sooner than expected. While the Bank's Governor Mark Carney has previously said that he does not expect a rise until unemployment drops to 7%, probably in 2016, faster than expected recovery has prompted speculation that rates may rise as early as 2014.
With official unemployment figures now standing at 7.4%, many observers believe the crucial figure may be hit earlier than 2016 and even ahead of the next General Election in May 2015.
And, a new poll has found that more people would be better off with a rate rise than would suffer financially. Some 31% of those questioned by YouGov for The Times said that a rise in interest rates would leave them personally better-off, against 23% who said they would be better-off with lower rates. 32% said they thought a rate rise would make little difference either way.
Keith Osborne, editor of Whathouse.co.uk, says: "While a mortgage rate rise would hit many homeowners hard, this survey reveals that savers - who are typically older people and, crucially, more likely to vote - may be more important to the election outcome.
"A rate rise would provide a boost to millions of people for whom savings returns over the last few years have been awful."
Interest rate rise "likely to please far more people than it troubles"
YouGov president Peter Kellner told The Times: "For the moment, when inflation looks set to stay low, a modest rise in interest rates is actually likely to please far more people than it troubles.
"In electoral terms, that effect is likely to be heightened as the very people who plainly benefit most from rising rates - the over-60s - are those most likely to vote.
"If David Cameron and George Osborne can preside over low consumer-price inflation but higher rises in the price of homes and other assets such as shares, then some rise in interest rates is likely to win them more votes than it loses."
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