Thousands paying no interest on mortgages

Date:Tuesday 10th March 2009
Author: Susanna Kavka

Tens of thousands of mortgage holders are not paying any interest following last week's rate reduction by the Bank of England.

More than 50,000 mortgage holders have tracker deals that guarantee they pay at least 0.5 per cent less than the base rate.

Those with such deals with Cheltenham and Gloucester are 1.01 per cent less than the base rate.

Ray Boulger of mortgage expert firm John Charcol has called for lenders to pay interest to mortgage holders on such deals.

When the Bank of England announced its rate cut, Mr Boulger said that some borrowers could cut ten years off the duration of their mortgages if they maintained payments at September's levels.

But he also warned that the most expensive debts should be paid off first.

Mr Boulger advised people to think of the future, noting that rates will rise again eventually and that higher rate deals may prove to be the best for the long-term.