Tracker mortgage overpayment benefits wasted by 56%

01 April 2009 / by Rebecca Sargent
More than half of tracker mortgage customers are failing to use their historically low interest rates to make mortgage overpayments, research from Unbiased.co.uk has revealed.

According to the study, just 22 per cent of tracker mortgage customers have kept their mortgage repayments at the same level they were at before the recent rounds of interest rate cuts.

Of those customers who have chosen not to make overpayments, almost a third are using the windfall to pay for day-to-day expenses and for treating themselves, while 38 per cent are using the extra cash to pay off other outstanding debts.

A further 12 per cent of benefactors are using the money to build up their current account balance, while 17 per cent are putting the money into a savings account.

Commenting, Richard Winder at Unbiased.co.uk said: "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."

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