BoE – no significant change in home repayments

Category: Mortgages
Date: 6/19/2009

A Bank of England trends report has revealed that, despite the significant fall in the base rate of interest, there has been no significant rise in the amount homeowners are paying off their mortgages each month.

Since the Bank's decision to cut the base rate to an all time low 0.5 per cent, consumers with tracker and variable rate mortgages have seen their interest repayments dwindle.

However, rather than using the low rate of interest to pay more off the outstanding home loan, which can potentially knock years off the time taken to pay off a mortgage, people are choosing to pay off a similar amount as they were before the rate was cut.

Many homeowners are likely to be more inclined to build up their savings in times of economic uncertainty.

"There has been no significant change in other lump sum type repayments or regular repayments," the Bank of England said.

"Lenders have reported that, while some households may have used part of the gain from lower interest payments to increase the rate at which they are paying off their mortgages, others may be making lower repayments because they are experiencing financial difficulties or are more uncertain about their future financial position."