The CML estimates that between April 2005 and March 2012, 2.3m borrowers paid off more than the contractual amount on their mortgage. Aside from loans which have been paid off in their entirety, this equates to around 34 per cent of mortgages taken out over this period of time.
With the Bank of England’s base rate at the historically low level of 0.5 per cent – where it has remained since March 2009 – borrowers are accumulating greater equity stakes in their property and reducing the impact rate increases will have on their finances.
The fact that a growing proportion of borrowers are paying off their mortgages earlier than expected also offers a greater range of options to borrowers should their financial circumstances deteriorate unexpectedly.
If the current trend continues, the CML predicts the number of outright owners could overtake the number of mortgage borrowers by as soon as 2014.