As long as mortgage rates remain low and homeownership remains relatively high, the Tories are likely to remain constantly in an electoral fight.
Even with unemployment over 10%, Margaret Thatcher’s “Right to Buy” scheme — which boosted homeownership — and her stewardship of declining mortgage rates provided her in part with the platform for electoral victories throughout the 1980s. Ever since, the housing market has been an important factor in Conservative electoral success.
However, the ongoing rise in mortgage rates threatens to undermine any electoral strategy Rishi Sunak might have. Even if current rates are low in comparison to certain periods over the last 50 years, this rise will cause financial stress equivalent to periods of record-high mortgage rates due to people nowadays borrowing much more relative to their incomes.
But what is especially interesting is that it will close the door on hopes the Conservatives might have of holding onto their Red Wall gains. There was a huge correlation between homeownership and Tory success in the Red wall in 2019. Yet with the rise of mortgage rates, the party risks losing its new voters as quickly as it gained them.
First-time homeownership expanded much faster in Red Wall seats than in the rest of the country under Tory government. The East Midlands lead the way with a 93% increase in new first-time buyers over the last 10 years, with the North East, Yorkshire and the North West all witnessing similarly significant increases in the number of first-time buyers, all of over 80% in the same timeframe. This is particularly stark when we compare it with the South West of England, which has only seen a 66% increase, and Greater London — not surprisingly — only a 35% increase. This rise in new homeowners in Red Wall areas likely explains in part why they have leaned towards the Conservatives.
When we look at the Tories’ current seats, only three have homeownership rates lower than 50%: Chelsea and Fulham; Kensington; and Cities of London and Westminster. These are all constituencies in London. Indeed, when we look back to the last time the Tories gained a seat from an opposition party, the Red Wall seat of Hartlepool in a 2021 by-election, we once again find that homeownership was 59.8% and the election was set against a backdrop of record-low mortgage rates.
Rising mortgage rates are thus very damaging for the Tories. First-time buyers are more likely to have mortgages; with the number of first-time buyers increasing in the Red Wall, mortgage rates will continue to become a more salient issue there. If mortgage rates continue to rise, first-time homeownership numbers will decline in the North and further cement Labour’s grip over the seats, as formerly Tory voters will become disillusioned with the party’s inability to support homeownership.
The solution is not so simple as to subsidise those with outstanding mortgages. This would further encourage the feeling among the increasing number of young people unable to get on the housing ladder that it is older homeowners, and not them, who are being prioritised. Unless the Tories move swiftly, this impending crisis will very likely damage the electoral success that the party briefly enjoyed in the Red Wall.