Homeowners in England and Wales have seen a 20% drop in their mortgage costs during the past year, research has claimed.
Monthly mortgage repayments have fallen from an average of £607 in December 2008 to £497 in the final month of 2009, following reductions to the Bank of England base rate, according to the Woolwich.
As a result, homeowners spent just £157 of every £1,000 of take-home pay they received on their mortgage in December, down from £196 per £1,000 a year earlier.
Although the majority of the steep reduction to the base rate had already happened by the end of 2008, homeowners on fixed-rate deals only benefited from the cuts once their mortgage deal came to an end and they went on to their lenders' standard variable rate, contributing to the steep fall in average mortgage costs during the year.
Andy Gray, head of mortgages at Woolwich, said: "For the 11 million UK households who have a mortgage there is a silver lining to the recession - a substantial reduction in mortgage payments right when they need it most.
"For them it's a chance to save in a way they might not have been able to before, or to overpay their mortgage and cut years from its life."
People in London saw the biggest reduction in the proportion of their take-home pay that they were spending on their mortgage, with this falling by 23% during the period, followed by those in the South West at 22%.
Homeowners in the North East saw the smallest reduction at 15.5%, with people in Wales, the East and North West all seeing an 18% drop.
The research is based on a sample of two million Barclays current account holders who have mortgages with a range of UK lenders.
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Source: The Press Association
Glad to know that mortgage rates in UK are doing well. Thanks for the post!
Posted by: Lance Puig | February 11, 2010 at 05:56