Britain's wasted mortgage years

Over two thirds (63%) of borrowers on a tracker mortgage are not taking advantage of the low interest rates to overpay on their mortgage, according to research by unbiased.co.uk. This has risen from just over half (53%) of borrowers in May 2009.  Only one in ten (11%) are making occasional overpayments on top of their current monthly payments.

Of the tracker mortgage borrowers surveyed, just 13% have deliberately maintained their mortgage repayments at the same levels they were paying before the base rate was cut to 0.5% in March 2009.  This has fallen from one in five (20%) who were taking advantage of overpaying on their mortgage in May 2009.

Of those who are failing to overpay on their monthly mortgage payments, almost a third (28%) are using the money they are saving on their mortgage to pay off other debts.  However, a quarter (24%) are just frittering away the extra cash on day-to-day expenses.  Despite interest rates on savings accounts remaining at an all time low, over one in ten (13%) are putting the extra money into their savings pot and 4% are treating themselves to an extra treat, such as a holiday.

Karen Barrett, Chief Executive of unbiased.co.uk comments: "With the base rate remaining at an all time low of 0.5% since March last year, many tracker and standard variable rate mortgage borrowers have enjoyed prolonged lower monthly payments.  This has presented many with the ideal opportunity to pay off their outstanding mortgage more quickly, resulting in years being taken off their overall mortgage repayment term, or enjoy a greater level of repayment comfort down the line.  It is worrying to see than instead of taking advantage of the historic low base rate, our tracked research shows there is an increased trend of people failing to overpay on their monthly mortgage payments.  

"We are encouraged by the increasing numbers who are using their repayment savings to erode their more costly credit card and personal loan debts.  However, those who are instead putting the extra into a savings account are missing out, as interest rates on savings also remain at a record low.

"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.  You can carry out a free and confidential search to find a whole of market mortgage adviser near you at unbiased.co.uk's ‘find a mortgage adviser' search."