Regional opinion is divided over the impact of a future interest rate rise, with slightly more people believing a rise would leave them financially better off than think one would do the opposite.New research by insolvency trade body R3 and ComRes found that almost a third (31%) of adults across the North East, Yorkshire and Humberside felt an interest rate rise of one percentage point or more in the next 18 months would improve their financial situation (the same proportion as for the overall UK population), compared to just over a quarter (26%) who thought they would be negatively impacted.
A further 32% of people of those surveyed thought such a change in the interest rate wouldn’t have an impact on their finances either way.
Allan Kelly, chair of insolvency trade body R3 in the North East and a restructuring partner with Baker Tilly North East, says: “An interest rate rise would create ‘winners’ and ‘losers’ in the region in roughly equal measure, but such a rise will have much more of an effect on those who expect to lose out than it will on those who expect to gain and, when it inevitably comes, it will be a big test for household finances.
“The cost of added interest on a mortgage of hundreds of thousands of pounds is much greater than the benefit of increased interest on savings of tens of thousands of pounds.”
Across the UK, the over-65s are the group most likely to think they would benefit from a rate rise, with 50% saying it would make them better off and only 13% expecting to be made worse off.
However, almost two-fifths (39%) of those aged 45-54 said a rate rise would make them worse off, the highest proportion of any age group.
According to R3 and ComRes’ research, 89% of those aged over 65 say they have savings, the highest proportion of any age group.
Allan Kelly continues: “There is a very clear generational divide when it comes to the impact of interest rates, and the prolonged period of record low interest rates has had a particularly big impact on older people, many of whom are reliant on savings for income.
“The likelihood of someone over 65 entering insolvency has increased since 2009, whereas it has fallen for all other age groups.
There were 5.3 insolvencies for every 10,000 adults over 65 in 2009, rising to 5.8 in 2014. By comparison, there were 30.9 insolvencies for every 10,000 adults of all ages in 2009, falling to 21.8 in 2014.
“Anyone of any age with worries about their financial situation should make sure they seek advice from a qualified source before things become too bad, so that steps can be taken to get their finances back on an even keel.”