Homeowners in Britain are turning to making larger and earlier repayments towards mortgages to avoid paying higher interest rates.
Over the last year, the Bank of England’s base rate has been raised multiple times and is now at a 15-year high of 5.25 percent to rein in inflation.
While savers have been able to benefit from this decision, mortgage holders have seen their repayment costs rise substantially.
Despite house prices dropping, the property market has become even more unaffordable due to rising interest rates.
Current homeowners are turning to making early mortgage repayments to help reduce the cost.
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When someone’s mortgage balance is lower, the interest they pay will also be lower and the original mortgage term may end up being shorter.
Recently, banks and building societies, including Nationwide, have been reducing mortgage rates to entice customers.
However, a recent poll of Britons carried out by Butterfield Mortgages has found that these cuts are not enough for many mortgage holders who are being forced to rely on other measures.
The survey found that 25 percent of homeowners have switched to a fixed rate in the past 12 months.
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Furthermore, around 27 percent have made early lump-sum repayments in the last year to avoid the hiked rates.
This figure jumps to 49 percent among those that are on either a tracker or standard variable-rate mortgages, which are directly affected by the base rate.
Outside of early repayments, Britons have been forced to make other difficult decisions to avoid soaring mortgage costs.
Some 20 percent of those polled have delayed plans to buy a new home in the past 12 months due to higher rates.
On top of this, 13 percent of homeowners have been forced to downsize to reduce their mortgage payments
Alpa Bhakta, the CEO of Butterfield Mortgages, explained: “There’s no denying that borrowers have had to navigate a particularly complex mortgage landscape over the past 12 months.
“The data highlights that many people are taking proactive measures including making early repayments or bringing forward home-buying plans to stay ahead of further rate rises.
“Against the backdrop of a challenging economic climate, being proactive, staying informed and seeking advice is more important than ever, allowing mortgage customers to make sound financial decisions.”
