Tracker mortgage borrowers risk squandering low rate benefits

More than half (56%) of borrowers who say they are on a tracker mortgage are not taking advantage of historic low interest rates to overpay on their mortgage, suggests research by professional advice website Unbiased.co.uk. Of the 158 tracker mortgage borrowers surveyed, just one in five (22%) have held repayments at the levels they were before the recent drastic round of rate cuts, enabling them to take full advantage of the opportunity to reduce the amount outstanding and term of their mortgage.

Nearly a third (31%) of those tracker borrowers not overpaying are spending their monthly repayment windfall on day-to-day expenses or treating themselves, while a more sensible 38% say they are diverting these savings to pay off other debt. 12% say they are allowing the balance to build up month by month in their current account, and 17% are bolstering their savings in deposit accounts.

Richard Winder, spokesperson for the Unbiased.co.uk ‘find a mortgage adviser' service, comments: "Tracker and standard variable rate mortgage borrowers have watched interest rates plunge to record lows in recent months, presenting an ideal opportunity to pay down more quickly the amount of the outstanding mortgage. Such action would enable millions of borrowers to take years off their mortgage repayment term, or enjoy a greater level of repayment comfort down the line, should the recession begin to bite harder.

"Our initial 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.

"If you are confused about how to best manage your mortgage and take advantage of low interest rates, professional and personal mortgage advice can make a clear difference. Only a whole of market mortgage adviser will be able to advise borrowers on the best deal for their circumstances."