With the average tracker dropping from 6.27% APR in October to just 3.27% today, each of these tracker customers will be around £260 better off every month. This money has provided a lifeline for at least 909,850 customers who have been forced to use the cash to pay household bills. 176,100 people have simply thrown caution to the wind, using the extra money to treat themselves.
Just one in five (616,350) customers have been sensible or lucky enough to use the extra cash to overpay their mortgage, which means they could save a staggering £16 billion of interest and knock almost nine years off of the mortgage term. Unfortunately, it seems overpaying a mortgage is not that straight forward with every provider. Over 230,000 consumers claim that their provider made it so difficult they just couldn't be bothered.
Louise Bond, personal finance manager at uSwitch.com said: "The recent base rate cuts, amounting to 3% over the last two months, have been welcome news for three million consumers on tracker mortgages. However, with annual savings of up to £3,105 on the average tracker mortgage, people who can maintain their previous mortgage repayments should consider overpaying to reap the longer term rewards. It is recommended to save the equivalent of at least three months salary, and with unemployment figures set to rise in 2009, those reaping the rewards of their tracker mortgage should consider this opportunity to build up such a buffer.
"The best way to spend the extra money varies according to individual circumstances. However, consumers should grasp this long awaited opportunity to make sound financial choices for their future."
