High mortgage costs are one of the key concerns facing millions of voters in the run-up to July’s general election and Rachel Coles, 29, from Essex is one of them.
“My main concern when it comes to the election is interest rates and mortgages”, said the mum-of-one who is due to remortgage next February.
Interest rates are at a 16-year high of 5.25 per cent at the moment, and mortgage costs for many families have gone up by hundreds of pounds a month as a result.
Many are feeling the squeeze, and after last week’s shock announcement of a general election on 4 July, the spotlight is on what the main parties are promising. In a fragile economic climate, where millions of people have faced huge price rises over the last few years, financial measures will be at the forefront of many party manifestos.
Rachel says she would struggle with the household bills if things were to remain the same, and she would be forced to cut back in lots of areas.
“We used to be able to save around £500 a month but now we’re not saving anything after how much prices have risen.
“We go without takeaways, family trips out and impulse buys and we can just about afford one holiday a year now while we would previously always aim for two.”
Rachel says if things stayed the same the family would need to make some big changes to their finances to be able to afford a higher mortgage rate. Her mortgage on their home in the village of Ingrave, outside of Brentwood, is a five-year fixed rate of 1.99 per cent. She thinks it would rise by around £500 a month based on current rates.
The average two-year fixed rate mortgage is currently 5.91 per cent while the average five-year deal is 5.48 per cent, on average, according to Moneyfacts, though cheaper deals are available.
Asked what she would do if faced with an increase, Rachel says: “I’d probably cancel a lot of our insurance policies, things like pet insurance and phone cover, and get rid of subscriptions such as Netflix and Spotify to free up some extra money. But I’m really hoping it doesn’t come to this.
“We’ve had a very tricky 12 months even though we are better off with our income than we were.”
It’s predicted that rates will start to go down at some point this year, but there are no guarantees as to when or how quickly this will happen.
Childcare costs also a concern
Rachel’s son Dougie is two and a half and she pays for him to go to nursery full time but because her husband’s salary is above £100,000 they are not eligible for any help with fees from the government. While there is some help for working parents they must earn at least the minimum wage and neither parent can earn more than £100,000 to qualify.
Yet many groups have criticised the way the system works and believe it penalises families with one high earner. A part-time childcare place for a child under the age of five is £148.63 per week, on average. That’s £7,728.76 a year, or just over £15,000 for a full-time place, according to the children’s charity Coram. Prices vary massively across the country.
Rachel who pays £1,170 per month for Dougie’s fees, says: “We’re not eligible for anything from the government when it comes to nursery fees. I think everyone should have access to some help with childcare costs, and it shouldn’t feel like our children are punished because we earn a certain amount.”
Looking at school-age children, Rachel also thinks after school clubs costs should be included.
She said: “I used to work in a school and was shocked at the cost of after school clubs. The government want more people in work, but they make it hard for us with children.”
As the owner of Conv3rt Marketing, Rachel said she’ll also be looking to the next government to address issues around business rates.
“As I run my own business, this means I need to look at what’s better for me personally but also what works for my business financially when it comes to voting.”
Her marketing agency has an annual turnover of £150,000 and she said historically Labour isn’t the best option when it comes to policies concerning business tax and the treatment of directors and what the UK needs right now is a more centralised party.
Rachel says her top priorities for the next government are for mortgage rates to drop, mental health services to be improved, and for business costs to return to what they were before May 2024.
“I’d also like a government that can sort out the cost-of-living crisis. It affects everyone, not just those on lower incomes,” she said.
Looking at the July election, Rachel said she will vote for Labour, but mainly because she thinks the country needs a change from a Conservative government,
“I’ll keep my eye on manifestos and see who is offering the best for me, my business, and also the country. I think we’re in a dire situation currently so things need to change and parties need to show they are going to create change,” she added.
