Mortgages 'can be paid off earlier' but fixed rates 'not reduced'

Date:Thursday 13th November 2008

Mortgage borrowers can pay off their mortgages as much as six years early thanks to interest rates cuts, it has been claimed.

Mortgage expert firm John Charcol said that the two per cent cut seen in the last two months has caused many mortgage holders' monthly repayments to "reduce dramatically".

The company urged borrowers to maintain their payments at the original levels, using the low interest rate to overpay.

It said most people would be able to settle the loan six years early and save thousands of pounds in interest.

John Charcol director Drew Wotherspoon said the economic situation gives "the perfect opportunity for borrowers with trackers to pay their mortgage back quicker".

At the same time, however, finance website has reported that lenders are not reducing their fixed-rate mortgages.

The average two-year fixed-rate deal today in 6.13 per cent, while a two-year swap rate is just 3.61 per cent, the website said.

Moneyfacts analyst Michelle Slade said that fixed rates should be at least one per cent lower even with larger risk margins taken into account.