We’ve had rock bottom interest rates for over two years now and you would think this would encourage people to make additional payments to reduce the size of their contractor mortgage.
Surprisingly enough, it turns out that few people are taking advantage of this golden opportunity. A study by Unbiased.co.uk has discovered that 63% of people with a tracker mortgage made no overpayments last year and only one in ten made an occasional overpayment.
Barclays also released their findings which showed that a mere 10% of its home loan customers are currently making overpayments and a further 6% intend to do so before the end of this year.
A lot of households could be concentrating on reducing their credit card debts rather than reducing their mortgage. We’ve also seen rising inflation and low wage rises, so a lot of people may not have any spare cash available.
Meanwhile, Capital Economics claims that the eurozone crisis will restrain mortgage lending well into next year.
The firm published its housing market update at the beginning of the week and pointed out that although mortgage lending has improved recently, a full recovery is unlikely any time soon.
Since June, the cost of wholesale funds has increased by about 2% and the rise shows that the financial markets are concerned that UK lenders could be exposed to the growing sovereign debt crisis currently underway in mainland Europe.
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