Group links Britons’ election vote to mortgage costs

How Britons vote in the general election in three months could determine the cost of their mortgage.

Analysis by the National Institute of Economic and Social Research of the three main political parties’ implied fiscal plans shows interest rates would rise marginally faster over the next four years under Labour and the Liberal Democrats than if Prime Minister David Cameron’s Conservatives form the next government.

That’s because the slower pace of deficit reduction envisaged by Labour and the Liberal Democrats would stimulate faster economic growth and employment, prompting the Bank of England to raise rates sooner, Niesr predicts.

Under Labour or the Lib Dems, rates would be 70 basis points higher by 2019 relative to what they would be under the plans of the current Conservative-Lib Dem coalition, Niesr said.

A Conservative-only government would lead to rates being 30 basis points higher.

The Bank of England has kept the benchmark rate at a record-low 0.5%.

Slowing inflation has prompted traders to push out bets on timing of the first rate increase.

Bank of England governor Mark Carney will publish the central bank’s new economic forecasts and its outlook for inflation, at a press conference in London on Thursday.

* Bloomberg