New figures from Barclays show that only 10 per cent of homeowners are deliberately overpaying
their mortgage to benefit from the current low interest rates.
A study by the bank has revealed that 84 per cent of homeowners paying a mortgage could
reduce the overall term by paying more than the contractual monthly payment. Many borrowers
are currently benefiting from the lowest ever Bank of England base rate, and Barclays is urging
customers to take advantage while they still can.
Barclays’ head of mortgages Andy Gray said: “Even with the reality that interest rates will start to
rise at some point, many borrowers are likely to be able to afford a little more than they think.”
For example, paying just an extra £50 per month on a £150,000 mortgage with a 25-year term could
shorten the term by two years and four months.
Of the thousand borrowers surveyed, 6 per cent said they intend to start overpaying their mortgage
this year. 56 per cent intended to restructure their payments to reduce the mortgage term to less
than 15 years.
Meanwhile, the latest index from mortgage brokers John Charcol show an increase in people opting
for fixed rate mortgage deals, with 55.4 per cent of borrowers opting for fixed rates in February.
However, this may change as average fixed rates begin to creep up due to predictions about a
forthcoming rise in the Bank of England base rate.
John Charcol’s senior technical manager Ray Boulger said: “Borrowers wanting to fix but who have
missed the boat should consider waiting for rates to fall back.”
