Lloyds Banking Group allows higher overpayments

15 March 2010 | By Natalie Thomas

The scheme will last for one year until March 31 2011.

Mortgage payments capital and interest accounted for 32% of average post earnings in 2009 Q4 - whereas they accounted for almost half, 47% in 2007 Q4.

This means that the amount of money customers have left has increased by 15 percentage points since 2007 Q4.

Recent research conducted on behalf of Lloyds Banking Group shows that around one in four consumers questioned are already choosing to overpay their mortgage.

Of those consumers questioned who had already chosen to overpay, almost half, 48%  indicated that they were overpaying their mortgage to reduce the term of mortgage and under a quarter 22% said they were overpaying to pay less interest over the term of the mortgage.

Stephen Noakes, commercial director of mortgages, Lloyds Banking Group, says: “With mortgage rates at an historic low, there has never been a better time for the majority of people to overpay their mortgage.

“The average mortgage repayment has dropped by around £188 per month. And those on tracker mortgages have done even better - on average they are just over £400 a month better off. Customers have a choice to make to gain maximum advantage from the extra cash in their pocket.”

“We are seeing our customers behaving very rationally. A number of whom are not necessarily banking the reduction in their interest payments but are actually using that to pay down their interest. This is a very positive move. Not only can it help customers shave interest off their mortgage, it also means less of a payment shock should interest rates begin to move back up.”