Investor Today

News Story

UK mortgage holders wasting low interest years

Tuesday 22nd September 2009

Research by professional advice website Unbiased.co.uk suggests that more than half, or 53 per cent of borrowers who say they are on a tracker mortgage are failing to take advantage of historic low interest rates to pay down their mortgage balances.

Of those surveyed, just one in five, or 20 per cent have kept mortgage repayments at the levels they were before the round of rate cuts earlier this year, allowing them to slice capital off the outstanding balance and cut down the amount of interest they pay or cut down their loan term.

Instead, nearly one in five, or 19 per cent of those tracker borrowers are spending their monthly repayment windfall on day-to-day expenses or treating themselves, while a more sensible 24 per cent say they are diverting these savings to pay off other debts. Just seven per cent say they are allowing the balance to build up month by month in their current account, and 20 per cent are bolstering their savings in deposit accounts.

Worryingly, said Unbiased, over one in ten (12 per cent) are not overpaying on their mortgage afraid that they will be charged for doing so.

David Elms, chief executive of Unbiased.co.uk said: "Tracker and standard variable rate mortgage borrowers have watched interest rates plunge to record lows during this year, presenting an ideal opportunity to pay off their outstanding mortgage more quickly. Such action would enable many thousands of borrowers to take years off their mortgage repayment term, or enjoy a greater level of repayment comfort down the line, should the economy take longer to recover.

"Our research suggests most tracker borrowers are not taking this action, however we're encouraged by the large number who are using their repayment savings to erode their more costly credit card and personal loan debts.”

View Comments 1 comments

Posted By Robert Stoud on Wednesday 23rd September 2009 12:50:16
People are sickening. They just spend every penny that get and do not worry about the future. This is an idea time to take advantage of the low rates and over pay their mortgage.