It has been reported recently that many homeowners in the UK are using the savings that they are making on their mortgage repayments to make repayments on their credit card debts.
With the base interest rate having fallen to an all time low of 0.5 percent, where is has remained for the past seven months, many homeowners on variable and tracker mortgages have seen their monthly repayments plummet, and this has resulted in them having more money available to put towards other financial commitments.
One recent report has suggested that many of these homeowners who have seen their monthly mortgage repayments fall as a result of the low base rate have been using the extra money to put towards their credit card repayments, thus reducing their credit card debt.
Only one fifth of homeowners with mortgages said that they were using the extra money leftover to maintain higher mortgage repayments and therefore aim to clear their mortgage debt more quickly,
The survey found that around 7 percent of homeowners who had saved money on their monthly repayment due to the lower base rate had decided to use the extra cash to build up money in their current accounts. Around 25 percent said that they were using the extra money that they were saving on mortgage repayments to pay off other debts.
One industry official said: “Tracker and standard variable rate mortgage borrowers have watched interest rates plunge to record lows during this year, presenting an ideal opportunity to pay off their outstanding mortgage more quickly. Such action would enable many thousands of borrowers to take years off their mortgage repayment term, or enjoy a greater level of repayment comfort down the line, should the economy take longer to recover.”
