Abacus Daily Debt News

Borrowers ‘may not be using spare money for mortgages’

People could be avoiding using additional income to make mortgage payments on their house, it has been revealed.

The Council of Mortgage Lenders (CML) stated that while the financial status of variable rate borrowers has gone up by roughly £20 billion a year due to interest rate cuts, only about £5 billion of this is being used to pay more on home debts.

This suggests people on tracker mortgages may be putting off using money saved on low interest rates for other purposes rather than trying to reduce the amount they owe on their homes.

However, it could also mean that debt repayment is being offset by other areas of the population, such as the self-employed, who may be experiencing financial difficulty despite the lower rates.

Earlier this year, HSBC subsidiary First Direct said that debt management was important for homeowners trying to handle their cash flow during the recession.

By Francis Finch