Mortgage Borrowers Tend to Make Regular Overpayments on Loans

The latest survey carried out by major UK mortgage lenders, the results of which were published by The Independent on Thursday, December 3rd, suggests that UK mortgage borrowers prefer to make larger repayments on their loans rather than spend extra money. Several lenders were quoted in the article released by The Independent; those included Abbey, Lloyds Banking Group, HSBC, Nationwide and Barclays. According to Abbey’s director of mortgages, Ms. Nici Audhlam-Gardiner, many borrowers of the bank were surprised to realise that keeping mortgage repayments at the pre-downturn level allows them to “make substantial overpayments without overstretching their monthly budgets.” The statement of Ms. Audhlam-Gardiner might well disturb the plans of the UK Government to boost the economic recovery of the country by encouraging consumer demand; as the rate of personal savings in the UK has been increasing since the beginning of the credit crunch, the Bank of England might be better off focusing on exports. Owner of several UK banks and building societies, such as Bank of Scotland, Birmingham Midshires, Cheltenham and Gloucester, Halifax, and Lloyds TSB – Lloyds Banking Group – claimed that the number of its clients who made overpayments on their mortgage loans grew almost by 100% in 2009, when compared to 2008. An average monthly overpayment across the lenders owned by the Lloyds Banking Group amounted to £350. Both, HSBC and Nationwide Building Society claimed that an increased willingness of borrowers to make overpayments on their mortgage loans has been noticed since mortgage interest rates dropped. Barclays even told The Independent that the number of people making regular overpayments rose 3 times when compared to 2008. As we reported on Wednesday, December 2nd, the Bank of England’s data, released on Monday showed that October marked the record amount of credit repaid by UK borrowers.