Brit households don’t fear base rate rise
Our survey has found that two thirds of Brits believe their household finances could cope with a rise in the mortgage base rate.We commissioned the survey to ask people how an increase would impact on their monthly budget. Although the Bank of England is widely expected to increase the UK base rate in 2015, 62 per cent of people surveyed said it would only impact their monthly budget a little or not at all.Twenty-two per cent of people believed a 0.5 per cent rise or more would not affect their monthly budget at all, whilst 40 per cent said it would only impact it a little.
Meanwhile just over 20 per cent of those surveyed said a first rise from the Bank of England since 2009 would squeeze their disposable income quite a lot, with seven per cent admitting it would have a significant impact. Ten per cent said they didn’t know.
The survey of 2,000 people also found that 65 per cent of people expect the base rate to rise by at least 0.25 per cent in the next 12 months in line with economist’s expectations. A fifth expected a rise of 0.25 per cent while 45 per cent thought it would jump by 0.5 per cent or more. A further 20 per cent of respondents admitted to having no idea.The results of the survey show that households recognise that although the base rate can’t stay at 0.5 per cent forever, it appears it won’t rise sharply as in the past.
If we do see the first rate rise in the next 12 months in line with economic forecasts, it won’t be large and borrowing rates, whether it be for a mortgage or a second mortgage, will remain low.This, combined with an increase in disposable income as a result of average wage growth continuing to outstrip inflation, means consumer confidence appears to be higher than it has been for several years.