Homeowner Loans Now At Most Affordable Level For Some Time
Since the credit crunch and economic slow down forced the Bank of England to reduce the base rate of interest applicable to homeowner loans and mortgages to the lowest rate in the history of the Bank, many borrowers, particularly those with a variable or tracker rate loan, have seen the cost of their homeowner loan reduce significantly, in some cases saving individuals hundreds of pounds in interest repayments every month.
As a result of these savings, a new survey from the Halifax has shown that the typical cost of a homeowner loan is now becoming more affordable all the time.
The figures from the Halifax show that, on average the cost of a person’s homeowner loan or mortgage accounted for just 29 per cent of their disposable income during the month of August this year. This has seen a significant drop in just less than two years, with the amount of money spent on homeowner loans falling by almost half in this period. During the third quarter of 2007, homeowner loan repayments accounted for around 48 per cent of disposable income, as an average figure, compared with just 29 per cent now.
However, it is important that those individuals with a homeowner loan should not become complacent about the lower cost of their loan and start to take the lower repayments for granted. It is quite likely that interest rates will increase again at some point in the not too distant future and borrowers should take this opportunity to overpay on their homeowner loan in order to reduce the outstanding balance and thereby reduce the impact of interest rate increases on their monthly loan repayments, when they do eventually arrive.
