The Potential Impact of Higher Interest Rates on the Household Sector: Evidence from the 2014 NMG Consulting Survey

15 Pages Posted: 17 Dec 2014

See all articles by Gareth Anderson

Gareth Anderson

Bank of England

Philip Bunn

Bank of England

Alice Pugh

Bank of England

Arzu Uluc

Bank of England

Date Written: December 8, 2014

Abstract

This annual article on the latest survey of households carried out by NMG Consulting on behalf of the Bank focuses on the potential impact of higher interest rates. If interest rates were to rise by two percentage points, while over the same period incomes rose by 10%, then the proportion of households with a high mortgage debt servicing ratio would rise from 1.3% to 1.8%. However, this remains well below previous peaks for this metric. Overall, the evidence does not suggest that gradual increases in interest rates from their current historically low levels would have unusually large effects on household spending.

Suggested Citation

Anderson, Gareth and Bunn, Philip and Pugh, Alice and Uluc, Arzu, The Potential Impact of Higher Interest Rates on the Household Sector: Evidence from the 2014 NMG Consulting Survey (December 8, 2014). Bank of England Quarterly Bulletin 2014 Q4, Available at SSRN: https://ssrn.com/abstract=2539531

Gareth Anderson (Contact Author)

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Philip Bunn

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Alice Pugh

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Arzu Uluc

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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