Mortgage borrowers choosing to overpay

Posted: 07 Dec 2009 11:51:41 GMT

homeowners are choosing to overpay on their mortgage to take advantage of the low interest rates offered by some banks.

The Co-operative Bank Mortgages found that there has been a 56 per cent year-on-year increase in the number of customers who choose to overpay on their home loans.

It is thought that this is due to the Bank of England base rate being at a historic low.

Bernard Clarke, a spokesperson for the Council of Mortgage Lenders says that many borrowers who are on variable mortgage rate deals have seen their borrowing costs reduce thanks to the base rate reduction.

He goes on to add that people can take advantage of this situation by continuing to pay their mortgage at the level that was set before the base rate was slashed. They will then be able to clear the commitment earlier than they anticipated.

According to a survey by the Independent, this is frustrating the Bank of England as the introduction of low interest rates and reduced monthly mortgage bills was hoped to boost other areas of the economy.

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