19 Jan

Rate cuts 'taking years off mortgages'

Rate cuts 'taking years off mortgages'

The time it takes to clear off a mortgage could be substantially reduced if customers keep on paying what they were before the recent base rate cuts, it has been suggested.

Price comparison website moneysupermarket.com has calculated that a customer with a First Direct Lifetime Tracker mortgage who was paying £1,000 per month in October would only need to find £690 to meet their monthly repayments now, as the rate would drop from 5.49 per cent to 1.99 per cent.

The site noted that were such a consumer to go on paying £1,000 a month, they could save £16,000 and end their mortgage nine years ahead of schedule.

Head of mortgages at the site Louise Cuming said the rate reductions mean people have the choice to "either take the cut in expenditure or keep their payments at the same level and put some sorely needed extra equity into their homes".

This Wednesday (January 21st) will see the publication of the minutes of this month's monetary policy committee.

If it is revealed that the vote for the cut to 1.5 per cent was unanimous, this may suggest there is a strong possibility of more reductions to come.

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